Healthcare costs often represent the largest retiree expense. Additionally, healthcare costs are increasing at a rate faster than the CPI (inflation). One 2016 study found that a healthy retiring couple would need $275,000 for out-of-pocket medical expenses over the course of their retirement. Creating awareness around healthcare costs is a critical goal.¹
A retiree needs to ask three questions:
1. How much money do I need?
2. How much money can I withdraw?
3. How long will my money last?
On average, someone needs to hear a message seven times before they take action. That’s why constant communication is so important. Healthcare cost calculators can also play an important role.
Five steps participants can take are:
1. Control what they can;
2. Make a ballpark budget;
3. Determine if they’ll receive retiree health insurance;
4. Explore health savings options; and
5. Set aside funds in a retirement account.
Participants pay more for healthcare under the following scenarios:
1. If they retire early;
2. As they age; and
3. If they are single.