Rising health care costs are going to continue to plague retirees, says a new report by HealthView Services, a data resource for financial advisors based in Danvers, Mass.
The 2017 Health Care Costs Data Report shows that lifetime retirement health-care premiums for Medicare Parts B and D, supplemental insurance and dental insurance for an average 65-year-old couple retiring this year are projected to be $321,994 in today’s dollars.
When deductibles, copays, hearing, vision and dental out-of-pocket costs are added, total retirement health care costs rise to $404,253, the report says.
Two keys to managing these expenses are increasing savings even modestly and managing health conditions, HealthView says.
A 55-year-old can increase 401(k) contributions by as little as $17 a week to address their retirement health care premiums, assuming a company match of 50 percent and they are meeting an 85 percent income replacement ratio savings goal, said Ron Mastrogiovanni, CEO of HealthView Services.
At the same time, changes in lifestyle can reduce expenses and extend life, he added. For instance, a 50-year-old male diagnosed with type 2 diabetes who makes lifestyle changes and follows doctor’s orders to manage his condition will increase actuarial longevity by eight years, save an average of $5,000 in out-of-pocket costs annually before retirement at age 65 and reduce in-retirement health care expenses by an average of $2,775 annually. If these savings are invested and generate a 6 percent return, it would amount to $120,000 at age 65.
“Health-care reform has been a major focus in Washington, but it’s important to recognize that the bill that recently passed the House would likely have a marginal impact on lifetime projected retirement health care costs, excluding long-term care,” said Mastrogiovanni.
Health care costs will continue to be daunting and the affect of inflation is often overlooked, he said. HealthView projects the annual retirement health care inflation rate to average 5.47 percent for the foreseeable future.