A 65-year-old woman can expect to pay $67,000 more in healthcare expenses and premiums than a healthy man of the same age, according to a new report.
The Insured Retirement Institute (IRI), Washington, published this finding in a summary of results a study titled “Health Care Expenses and Retirement Income: How Escalating Costs Impact Retirement Savings.” The report examines the impact of rising medical expenses on Baby Boomers’ retirement income planning and strategies that may alleviate some of the financial burden.
The report finds that a healthy 65-year-old male can expect a total cost of health care expenses, including premiums, for the rest of his lifetime to top $350,000. But a 65-year-old woman can expect at least $417,000 in health care expenses—a 13% increase compared to her male counterpart.
The report also finds that the average person on Medicare will have out-of-pocket medical expenses totaling more than $4,300 per year.
Baby boomers do not believe they are financially prepared to cover future medical expenses, the report says.
IRI research has found that 63% of boomers lack confidence that they will have enough money for medical expenses they incur during retirement. This concern is especially strong among younger boomers ages 50 to 54, with 72% stating they lack confidence that they will have enough money to cover medical expenses during retirement.
The report also finds that:
● The 2012 Social Security cost-of-living adjustment (COLA) of 3.6% represents an increase, on average, of $42 per month, or approximately $500 for the year.
● Per capita health care expenses increased by 5.75% in the twelve-month period ending September 2011.
● For 2012, Medicare Part B premiums will account for 8.2% of the average Social Security benefit, up from 5.1% in 2000.
● While the average Social Security check is 31% higher than it was in 2001, premiums for Medicare Part B have doubled.
● Although there is no decline in the COLA net of Part B premiums (net COLA) for 2012, Part B premiums have negatively impacted the COLA for 12 of the past 20 years.
● While 63% of all boomers lack confidence in their ability to cover medical expenses in retirement, the concern is most pronounced among younger boomers: 72% percent of boomers ages 50-54 are concerned about their ability to cover medical costs in retirement. However, concern is consistent among men and women (63%) and marital status (63% among both married and single Boomers).
● A 55-year-old man can reduce the total investment needed to fund future health expenses by more than 70% by adding an annuity.
The full IRI report can be found here.