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According to analysis, average out-of-pocket health care spending by Medicare beneficiaries is sizable and increases with age.
• On average, Medicare beneficiaries aged 65-74 spend $2920 a year in out-of-pocket expenses.
• Those aged 75-84 spend $3,815, a year.
• And, those 85 and above spend $4,615 a year – an average of 30 percent of their income.
Almost half of these out of pocket health care expenses were for premiums for Medicare part B or private medical plans. Approximately another 24 percent of that spending - $830 a year - is for prescription drugs.
Fidelity's Health and Welfare consulting experts estimate that a couple retiring today at age 65 will need $160,000 in savings to pay for their health care tab, including insurance premiums and uncovered medical expenses but not any long-term care costs.
While this may seem obvious, this news is worst of all for retirees with the fewest assets. The fewer assets you have, the greater percentage of those assets will go to covering medical expenses – leaving even less money to cover your basic needs.
• Beneficiaries with incomes below 135 percent of poverty spent an average of 33 percent of their income on health care.
• Beneficiaries with incomes above 400 percent of poverty spent 12 percent of their income on health care.
I could not find a Fidelity breakdown on rising costs with age. Was able to find an older article (at the time this article was written, the Fidelity estimate was $160K!), that listed Medicare "out of pocket expenses" as $2920 per year from age 65-74, $3815 from age 75-84. and $4615 at age 85 or greater. This is much less than the current Fidelity estimate of $5946 per year. But the article is old and may be focusing on costs of prescription drugs, supplemental insurance, deductibles, etc. and may not be covering things like hearing aids. But it does give you an idea how these costs increase with age. Also none of these estimates cover dental.
The easiest way to figure out your health care costs approximately is to take your Medicare costs for Parts B and D - and add a Medigap Plan F cost to that (Plan F covers just about everything) - and then add your drug costs that aren't covered by your Part D plan. Then add dental and vision and glasses and hearing aids and the like.
Unless you're like Escort Rider - and totally happy with an HMO like Kaiser in Los Angeles .
Note that this estimate doesn't cover the cost of any long term care - or insurance for it.
FWIW - my husband is 68 - and I am 66. We're on target to have about $11k in medical expenses this year (exclusive of our PCP concierge practice). About $5.5k per person (with no major dental work - no hearing aids - and only 1 new pair of glasses this year). So I think that Fidelity estimate is pretty much on target. Robyn
I could not find a Fidelity breakdown on rising costs with age. Was able to find an older article (at the time this article was written, the Fidelity estimate was $160K!), that listed Medicare "out of pocket expenses" as $2920 per year from age 65-74, $3815 from age 75-84. and $4615 at age 85 or greater. This is much less than the current Fidelity estimate of $5946 per year. But the article is old and may be focusing on costs of prescription drugs, supplemental insurance, deductibles, etc. and may not be covering things like hearing aids. But it does give you an idea how these costs increase with age. Also none of these estimates cover dental.
I'm not sure why costs would increase so much as one ages - unless one includes the cost of long term care (the need for it increases exponentially post age 80 or so). Or why they would be so cheap when one is younger (if you sign up for a particular Medigap policy at age 65 - you'll always pay the rates that the plan charges for new 65 year olds. So I assume you pay more when you're younger - less than you should when you're older - for the same coverage. My 95 year old father doesn't pay much more for his Medigap policy than my husband and I pay (and most of that is attributable to differences in coverage). Robyn
...A case in point would be that of my parents. My father died napping in his living room chair at the age of 85. May we all be so lucky. My mother did require a move into assisted living, but died two months later at the age of 90.
Notice I am not claiming my parents represent the "average" either. They were fortunate to be spared so much of the misery, both financial and otherwise. They represent the other end of the spectrum...
Nor should you claim your parents are "average". We've watched 3 parents die. Two at home - home hospice (mother and MIL) - and their deaths - although cheap - were pretty miserable (their husbands were in charge then). My late FIL (we were in charge then) died very comfortably (on a morphine drip) after living 2 1/2 years in a great SNF. Can't say he loved living there. But he didn't hate it either. Even though he had congestive heart failure as a result of a heart attack - a couple of stokes - bladder cancer (and a urostomy) - and a ridiculously aggressive skin cancer (angiosarcoma) - perhaps caused by his radiation therapy for the bladder cancer - he was content with his life - and didn't want to die (we talked about it). Until his last super-debilitating stoke - about a week before Christmas in 2004. He was ready to "meet his maker" then - and we talked about it. And we let him leave this world in great peace.
What people do - and how they approach death - varies to a great degree. One of my best friends died in her early 40's from cancer. In horrible pain. But she wanted to live just 2-3-6 months more - regardless - because she had really young children who barely knew her - and she figured the longer she lived - the more her children would remember her.
I'm not ready to write a generic prescription for death. Because I think different people in different situations face it in very different ways. And I sure don't know how I'll feel - what I will do - when the end of my time on earth is near. Robyn
Much better range but still not allowing for the fact that withdrawals from savings is not always a planned steady thing so doesn't fit the choices.
If one's "income" from SS, pension and reasonably predictable investments covers ordinary living expenses one might withdraw $28,000 one year for a car and only $1000 the next year to cover the deductible for damage to that car caused by some retired old geezer that should no longer be driving.
The question is about income not expenditure. Income from savings is the interest that savings pays that you have to pay taxes on, or not if the income is low enough. The amount in the account is your capital, not capital gains. I would think that withdrawals from retirement accounts would count at least after you get to 70.5 and are required to withdraw a certain amount.
I asked the same question in post #7. In post #8, I was told it was a "pretty straight forward question."
Guess not, if people are still asking about it.
The answer is household income. Sometimes that household income is based on one person, and sometimes it's based on two people. Without a poll that makes it possible for people to respond with two sets of data - total income and number of people - we can guess that some of the higher retirement figures are the result of the incomes of two people combined ... but that probably some aren't.
Personally, I find the poll results interesting. I had not expected to see such a high percentage of people (one or two incomes per response) up over $90K.
On the part of me and my husband - we have zero in the way of pensions. Each of us has SS (some of which might disappear were the other to die). We also have a lot of money in IRAs (not important in terms of getting us over $90k). But - we'll always have the IRA money even if one of us dies. IOW - most of our money is - simply speaking - our money. Which gives me the idea for another poll. Robyn
The question is about income not expenditure. Income from savings is the interest that savings pays that you have to pay taxes on, or not if the income is low enough. The amount in the account is your capital, not capital gains. I would think that withdrawals from retirement accounts would count at least after you get to 70.5 and are required to withdraw a certain amount.
My badly presented point was that some amounts do not become income unless needed for an expenditure that ordinary/steady income won't cover.
It was said that drawdowns should be included but not everyone draws down a specific amount on a steady basis.
I do count required withdrawals as part of the 'steady' funds.
My dad passed away at age 80 - after 3 weeks in the hospital - from Emphysema. There was no nursing home nor assisted living for him. Mom took care of him all by herself - with my local family helping.
My mother has been in assisted living and now full SNF/Nursing facility for 7 years. She is 93.
Her monthly non-medicare paid bill was $3500 a month at the beginning of her assisted living stint - increases in the 3rd and 4th year (thanks to her fx her pelvis) were up to $5-6K a month. None of that is paid by Medicare. It's now "graduated" to over $10K a month and it's been that way for over 2 years.
Another good point that I should have specified in the OP! I had in mind gross, but of course by now (with over 100 responses) people could have used different assumptions when answering. In some cases, the net and the gross could fall within the same category, but if one is near the boundary of a category then the net will be in a different category than the gross. If the income is low enough, then the net and the gross will be the same.
Lesson learned: When making a poll, don't be in a rush to get the damn thing up - think things through carefully especially with definitions and parameters.
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