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.