Financial well-being comes when we can meet current and future financial obligations, absorb financial setbacks, and keep driving towards financial goals, such as adequate retirement income. Life well-being comes when we live satisfying lives, full of meaning and purpose. We need financial well-being to enjoy life’s well-being, but it is life well-being that we seek. Is there a greater threat to a sense of financial and life well-being than the need for chronic and custodial healthcare?
During a recent client meeting with a client, we reviewed their retirement benefits designed to provide for health care costs during retirement. Their retirement benefits provided significant sums to my client, but was it enough to offset expected health and custodial care costs? What we found is that many retirees face significant risks to their financial well-being from uninsured health and custodial care costs. True North Financial Advisors helps clients develop retirement plans which include expected health and custodial costs based on your individual age, health status, family medical history, gender and state of residence.
Medical Health Care Costs in Retirement
According to HealthView Services Study: 2023 Report, the number of Medicare recipients has increased 39.8% since 2010 from 47.2 million to 65.8 million. During the same period, total Medicare expenditures rose 73% from $522 billion in 2010 to 905.1 billion in 2023. Based on the Study, which is based on 530 million medical health care cases, predicts “Retirement Healthcare Services will continue to grow 1.5-2 times faster than consumer price index (CPI). This rapid rate of healthcare costs effect First Responders the most due to their early retirement age and the anticipated number of years in retirement.
For a 65-Year-Old Couple retiring in 2023, they can expect to incur the following annual healthcare costs (National Averages): 2023-$14,100; 2033-$26,042; 2043-$45,114 for an average annual cost of $30,114 and projected lifetime cost of $780,361 (assumes life expectancy of 88 for males and 90 females). This inflation rate is the principal driver of future healthcare costs, which will continue to out-pace U.S. inflation and expected Social Security cost of living adjustments (COLAs). As this Report details, the compounding impact of health care inflation means that health care costs will be one of the most significant expenses in retirement to affect financial well-being. The burden of a greater percentage of income spent on healthcare is greater the earlier you retire because social security retirement income grows at a slower rate than the rise in health care costs.
Custodial Health Care Costs in Retirement
Custodial health care costs are not covered by Medicare (except, first 60 days) for services including assistance with activities of daily living (ADLs) such as, bathing, dressing, eating, getting in or out of bed or a chair and moving around, again these essential needs are not covered by Medicare. According to the Genworth 2023: Cost of Care Survey, “At least 70% of people over the age of 65 will require some form of long care services and support during their lives.” The 2023 Genworth Survey covers 435 cities across all 50 states and includes data from over 15,500 surveys from nursing homes, assisted living facilities, adult day care facilities and home care providers. The current median monthly costs (national average) of custodial care during 2023 for Home Health Aide Services is projected to be $4,385 and for Nursing Home Care (semi-private) is $8,669 and (private) is $9,733. For detailed cost of care expenses in your specific Florida County call us at 855-FRS-PLAN for more specific data.
With guidance from a True North Financial Advisors and your team of advisors you can:
- Develop a Comprehensive Plan;
- Control of Assets; in balance with
- Protection Against Spousal Impoverishment; and
- Help Communicate to Family Members.
True North Financial Advisors provides financial planning and investment advisory services to the LEO Community. For help protecting your retirement nest egg and generating the income you need for financial well-being, contact the investment professionals at True North Financial Advisors by calling 855-FRS-PLAN, to Set Your Own Course.
