How Much Is Healthcare In Retirement?

An often overlooked expense when saving for retirement is the cost of healthcare. In deciding when to retire, many people average out their yearly salaries and decide how much they will need to sustain their current lifestyle throughout retirement. 

At What Age Do You Plan To Retire?

Fidelity Investments came up with this average after deciding upon a retirement age of 65. Many of us in the personal finance community are aiming to retire at an age much younger than that.  

Medicare Does Not Cover Everything

For instance, a basic Medicare plan does not cover³:

– Hearing Aids – Routine/Preventative Foot Care – Most Dental Care – Eye Exam – Denture – Long-Term Care

Will COBRA Be Enough?

For those of us who would like to retire before the age of 65, COBRA may be an option. However, COBRA only allows you to stay on your employers sponsored healthcare plan for a year and a half. 

I logged onto the Healthcare Exchange and ran a retirement scenario at age 55. If I made the average American income of $56,000 a year after retirement, I would have a minimum monthly payment of $132.79 a month with a deductible of $15,800. 

The Affordable Care Act

Let’s assume you saved more than most people and in retirement, you are able to draw an extra $10,000 from your investments. 

The Second Scenario, A $10,000 Raise

If you plan on working until you are 65, you may have an easier time in retirement covering your health care costs than if you retire early. However, even with a retirement directly into Medicare, you may still spend $285,000 over your lifetime in healthcare related costs. 

Failing To Plan Means You’re Planning To Fail

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