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Grim Assessment of Retiree Medical Expenses - 4/16/15

HealthView Services, a Massachusetts based company that supplies retirement healthcare cost data and tools to financial advisors, recently released a grim assessment of retiree medical expenses.  The report was recently featured in the Wall Street Journal.  Among other things, the report concludes that a sixty-six year old couple retiring this year with average Social Security benefits can expect medical costs to consume sixty seven percent of the social security they will receive during retirement. 

According to HealthView Services’ CEO, quote thanks to the rising cost of medical care, retiring baby boomers are in for a rude awakening close quote.  For couples in midlife today, the news is even grimmer.  According to the report, a fifty-five year old couple who intent to retire in ten years can expect to devote approximately ninety percent of their lifetime Social Security benefits to healthcare costs. 

Why is this the expectation?  Because,  Social Security benefits typically expand by approximately two percent a year, the overall rate of inflation.  Medical costs generally tend to rise faster.  That said, the projections in the study assume that future healthcare costs will rise by an average of six and a half percent a year, but they actually have been rising less than that recently.

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.