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The Coming Healthcare Crisis for Retirees: What You Can Do to Protect Against It

According to an article in InvestmentNews.com, retiree healthcare costs could reach 98 percent of Social Security benefits within eight years:

“Average health care costs for middle-income retirees are on a path to exceed their Social Security benefits, according to a newly created Retirement Health Care Cost Index. The index devised by HealthView Services, a provider of Medicare, Social Security and long-term-care planning tools, measures the percentage of Social Security benefits required to pay for health care-related costs in retirement for a healthy couple receiving the average expected Social Security benefit at full retirement age.”

This means there is a financial health care crisis coming for senior citizens that will be a catastrophe equal to or bigger than Hurricane Katrina.  An average American healthy couple who retired in 2015 will have to pay out-of-pocket a little more than $360,000 for health care before they die.  That figure is not adjusted for inflation, either and in 20 years, healthcare costs will exceed the average Social Security monthly benefit.  

Because the Social Security benefit makes up the major portion of monthly income for 90 percent of retired folks, it will be devastating to have to use this money to pay for healthcare like hospitals, doctors and long-term care.  It will literally wipe out all savings.  And as one screen-shot-2016-09-16-at-2-31-17-pmpartner uses up the vast majority of retirement savings, due to health care costs, the surviving spouse will be financially destitute.

What to do? It is more important than ever to cut expenses, save more money now, and be prepared before this storm hits your shore.  Today, more than at any time in our nation’s history we need to take care of ourselves first, and not look to the government.  Social Security benefits are wonderful to have to pay for healthcare costs, but this is about all they will be able to cover, so don’t count on benefits being enough to cover healthcare AND daily living expenses in retirement.  I cannot emphasize enough, that soon 100 percent of your monthly Social Security income will be spent on healthcare expenses.  

I suggest you go to www.moneymastery.com and sign up for the basic plan for $4.95 a month, then follow the easy 7 Steps program to set up a Spending and Debt Plan. With these two plans in place you will have a mirror in front of you that will help you look directly at the state of your financial situation. If you don’t like what you see, then you can ask for personalized coaching.  If you don’t take action today, when your Health-Care-Katrina-Storm hits, it will be too late.  It takes time for you to learn and grow and take actions that will keep you safe in the future.  Start now by at least learning what your options are today so you can make better decisions for tomorrow. 

Average Household Approaching Retirement Has Just $14,500 in Savings…

The Federal Reserve Bank just released statistics regarding retirement savings for those approaching age 65.  The average amount people have saved is just $14,500, and to add insult to injury, the statistics show that one-third of all households have no retirement savings whatsoever.

What can a person do to better to prepare for retirement?  I offer the following, with some explanation:

  1. Build a spending plan and create a surplus each and every month for the rest of your life.  In other words, quit overspending.  Don’t try to just write down what you think you will spend, but review all spending for the last 12 months and know for a certainty where your money has gone.  Then use this information to forecast your spending now and then track how you spend. This will create a surplus that you can use to forecast retirement.  
  2. Do not try to “wing-it” and hope for the best.  This has never worked for anyone!
  3. Consider working part-time for many years into retirement so that you can afford health care and some of the extras you may want during retirement.
  4. Keep your money safe, but keep it working for you.  Remembermoney paper airplane (1024x683) that people are living much longer than ever before.  Consider using the newly designed fixed-indexed annuities that guarantee no loss of principal, yet have averaged 5 percent growth over the last 10 years.
  5. Learn how to do tax planning.  Rate-of-return is no longer the best approach — it is tax planning that will make a huge difference in the income you have to live on.
  6. Stay healthy by eating right and exercising five times a week.  Okay, you may think I have no business giving such advice, but it has saved me, now in my mid 70’s, lots of money that I have available for me and not for a long-term care facility. Simple walking will work wonders.  Health care costs can eat away at your savings very quickly.  We don’t always control our own health issues, but we can do what we know we should — doing so has personally blessed my life.
  7. Do not allow your grown children to draw down your savings.  Parents are tempted, but this can set a bad trend that children will come to expect.  A client of mine recently purchased an apron and cut off its strings, then put these into a gift for her son graduating from high school.  Her message was very clear. Hope you will get the same one.