The life expectancy of the average American male is 82 years. The average American female can expect to live until age 85. Compare those ages to an average life expectancy of about 48 years at the turn of the 20th century and it is nothing short of amazing. Living longer, however, comes at a cost – a real dollars and cents cost – for most Americans. Once you learn how much experts estimate healthcare costs will set you back during your golden years you may need to revisit your retirement plan.
Fifty years ago most people could depend on employer sponsored pension plans and healthcare plans that would cover them until death. Not so today. Today, most employer sponsored healthcare plans terminate when an employee reaches retirement age. Medicare, the federally administered healthcare program for older Americans, cannot be counted on either to cover all of your healthcare expenses in your golden years. In fact, figures recently released by Fidelity Investments indicate that a couple who retires today at age 65 will spend an additional $220,000 over and above what Medicare covers on healthcare costs throughout their retirement years. Prescription drug expenses will account for $50,600 of that while Supplemental Medicare premiums will eat up another $72,600 with the remaining $96, 800 going to additional out-of pocket expenses. Considering the fact that half of all Medicare beneficiaries have less than $77,500 in personal savings, this can be a serious problem.
While these figures are worrisome, they can actually get more troublesome. What happens if you live longer than the average life expectancy? According to the experts you can expect to spend a whopping $355,000 on healthcare costs if you and your spouse are fortunate enough to live to age 92 and 94. That, however, could be a drop in the bucket compared to what you may have to spend on long-term care costs.
Statistically, you have almost a three in four chance of needing long-term care at some point in your life, as does your spouse/partner. Medicare does not cover those costs, meaning you will be paying out-of-pocket unless you have another form of payment. Long-term care insurance is an option, if you can afford it. The average cost for a 60 year old, assuming you even qualify, is about $3,700 a year. You could easily spend upward of $100,000 for a policy you never use. On the other hand, without coverage you could be facing a long-care bill for well over $100,000 without the resources to pay it. The average cost for a year in a nursing home is $77,000and the average stay is over two years.
Medicaid Planning in the Quad Cities
The good news in all of this is that there may be a way to cover healthcare costs during your retirement years if you plan carefully. The Medicaid program in Illinois does cover long-term care costs as well as many other healthcare costs. Qualifying though can be difficult because of the income and resources guidelines. Talk to your estate planning attorney about incorporating Medicaid planning into your overall estate plan to ensure that you will qualify for Medicaid should you ever need it.
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