This week on the Retirement Quick Tips Podcast, I’m talking about the 5 ways to ruin your retirement...and all have nothing to do with the economy, the stock market, social security, inflation, or interest rates. 

Today, I’m talking about how health care costs can ruin your retirement. Healthcare is one of the biggest expenses for most retirees - ranking right up there with housing and transportation costs, and it comes with an equally big lifetime price tag. 

Fidelity estimates that about 15% of the average retiree's annual expenses will be used for health care-related expenses, including Medicare premiums and out-of-pocket expenses. 

In that same study, Fidelity found that the average retired couple age 65 in 2019 will spend $285,000 on health care expenses in retirement. For single retirees, the estimate is $150,000 for women and $135,000 for men. Ouch! 

On an annual basis, in my experience I find that most of my clients end up spending $5,000-$15,000 per year on healthcare costs. 

And then there’s the big unknown of long-term care costs. If you require long-term care for an extended period or if you develop dementia or Altzheimer’s, the costs skyrocket. The estimated lifetime cost of care for someone with dementia is $341,840.

There’s about a 50/50 chance that you’ll need some form of long-term care in your lifetime, and 15% of Americans will spend more than $250,000 on long-term care in our lifetime. 

Those expenses can wipe out your wealth, which is why it’s so important to understand your options and protect yourself.

If you’re in your 50s it’s a good time to look seriously at a long-term care policy and decide if you’re going to purchase coverage or take your chances with self-funding if you need expensive long-term care later in life.

The takeaway with today’s episode is that understanding your annual costs for healthcare in retirement is essential. Medicare isn’t free. You’ll still have out-of-pocket expenses each year. Make sure you understand what those costs are likely to be and make sure you include those expenses in your annual retirement budget before you retire. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast. 

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance