It's About to Get Political

This morning I was reviewing my lesson chapters on Medicare when I came across an interesting figure. It was the breakdown of how much, per month, Medicare premiums cost in the year my textbook was published, but I found last year's premiums. Basically it looks like this:

Medicare Part	Monthly Cost
A	Covered if you or spouse is Social Security eligible
B	$99.90
C	Variable
D	Variable but at least $30

It came out to just under $150 a month in insurance premiums.  And it’s indexed every year to accommodate increases in the cost of providing care, which is sort of scary when you think from 2010-2011 health care costs increased 15%. That doesn’t necessarily translate directly to Medicare, but could you imagine a 15% increase every year? In 5 years that $150 a month premium would double to just over $300.

Sometimes this is the only argument I feel is needed for universal health care. (That was where it got political.)

All of that is to say that the cost of healthcare into your retirement calculations are very, very important. This expense becomes the single largest into your older years, but is also the most underfunded. And while most retirement calculators remind you to add in the cost of health care, you don’t really think about that because right now you’re healthy and costs are minimal, or your employer covers your health care, or you don’t have health insurance.

As many of my cohorts watch our parents age and start to benefit from this care, we’ll start to hear more and more about these rising costs and the tough decisions that come with them. Do I pay for the extra day in the hospital or do I go home and hope the antibiotics are doing their job? It’s an unfortunate predicament to be in, but one that is not uncommon or novel. (And on a side note, it would be wise for my cohorts to do some research into MEdicare so as our parents age we can help them understand their benefits and navigate the health care system. This is especially important if your family is prone to Alzheimer's, dementia, or other age-related conditions that cause memory problems.)

So how to counteract this? Basically it comes down to planning. 

When you make your retirement calculations, don't take the easy way out and choose to plan for a percentage of your income. Include the costs of health insurance and other costs like co-pays for doctor's visits. And if you've watched your grandparents slowly breakdown, realize that their path could be very similar to yours (sorry for the dark turn) and plan accordingly. My paternal grandfather had 2 heart attacks and high blood pressure runs in both sides of my family so I not only take great care of my heart, but I've also planned for extended hospital stays. 

There are some good calculators on the internet if you do your research. Or you can just hire a financial planner!

Speaking of...

I'm announcing my new specific planning sessions today!!!!! Check them out here.

So if all you want is help planning for retirement, I have a session for that. And if you don't see something you're interested in, email me and we can come up with a quote super easily for what you need.