Understanding Health Care Costs During Retirement

    Published: 06-16-2009
    Views: 4,071
    Financial Advisor Ric Edelman talks about how to evaluate your income sources before retirement including understanding your potential health care costs.

    Ric Edelman: Hi! I am Ric Edelman. Thinking about retiring? Congratulations! Just make sure you think before you act. In this video we are talking about how to anticipate the cost of healthcare before you retire. This includes Medicare, Medigap and private insurance.

    Many people assume Medicare will take care of all of their medical expenses in retirement, wrong. Medicare covers just two thirds of healthcare costs, according to the Employee Benefit Research Institute. Private insurance and other government programs pick up some of the cost, but the rest is up to you.

    How much are we talking about? Well, experts estimate that a man who retires today at age 65 will need up to $211,000 to pay for health insurance premiums, copayments, and out-of-pocket expenses. It's even more expensive for women because they live longer. A 65-year-old woman needs up to $242,000 and if you are married add it all up, you and your spouse combine will need $400,000 in retirement just for medical expenses. And then there's the cost of long-term care. To avoid huge expenses there, consider buying long-term care insurance, buy it now. 70% of people aged 65 or older will need long-term care according to AARP. Private room in a nursing home, 75 grand a year, Medicare won't pay for it neither will your health insurance. A long-term care policy is a better idea. So that's how to anticipate the cost of healthcare before you retire.