As we get older, health care costs increase. This much, most of us can agree on, right?
That being said, when many of us plan for retirement we think about health care costs as just one part of our future needs. There are other basic needs – housing, food, etc – that we think about. But it’s often tempting to think about things that are wants, rather than needs. For example, traveling, a dream home, and other aspirational things of the like.
However, perhaps it’s time to revisit the personal finance hierarchy of needs, and look at the foundational needs. Did you notice “medical care” noted there? Well, it’s something that we all need, and this need increases as we get older. A recent article on WSJ brought to light some eye-popping monetary figures on the cost of health care in retirement. It’s really quite an expensive proposition!
The article noted a figure of $240,000 as the estimated cost of health care for a couple retiring in 2012. Even crazier, these costs apparently don’t include nursing home care expenses, according to the article.
This is, quite simply, a ton of money. Now, I’m nowhere near 65 or near retirement, but this still jumps out at me as a big deal that many people don’t seem to pay enough attention to. Like I alluded to before, I think that people tend to think about retirement as some kind of promised land of traveling, relaxing, maybe grandchildren, etc. But what about the elephant in the room: health care costs?
When you think about it, there are probably a ton of people here in the U.S. that are 65 or older that have nowhere near $240,000 in net worth. I mean, when you think about how many people can’t cover unexpected expenses, it makes you wonder how many are prepared to handle their health care needs in retirement. That is, if they can ever retire!
I really hope to not be in a position to face such struggles.. This type of situation serves as a financial motivator, in terms of being responsible with health and money, and planning for the future. That planning clearly must take into account the importance of good health, and the financial costs of not having it when older.
Bottom line: Save diligently for old age, no matter how far away, and be aware of the critical need to cover health care expenses.
My Questions for You:
Have you given thought to the high costs of health care in old age?
Does this figure of $240,000 surprise you, or is it in line with what you thought?
Do you ever wonder how people will handle such expenses when they don’t have much in savings to begin with?