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How Much Should You Budget for Medical Expenses in Retirement?

One of the biggest aspects of sustaining a fulfilling retirement is managing your healthcare costs. The estimated cost of medical expenses in retirement can be quite high. This means paying special attention to saving for and during retirement to ensure you have the resources to pay for those healthcare costs. Here’s what you should be thinking about when it comes understanding how much you should budget for potential medical expenses in retirement.

Understanding Healthcare Limitations for Seniors

Social safety nets in the United States provide healthcare support for seniors upon retirement. Medicare is the primary vehicle for this, and the benefits of this medical care coverage are many. Everyday healthcare costs like filling prescriptions and paying for routine doctor visits are one of the best uses of Medicare for retirees, which helps immensely with being able to afford the average out of pocket medical expenses while in retirement.

Yet Medicare isn’t perfect. Coverage isn’t comprehensive, as there are several gaps in what Medicare offers. Typically, this results in needing to enroll in Medicare Part D or another supplemental health insurance plan, and this of course comes with additional costs. Forgoing supplemental coverage can be even more costly, though, as paying out of pocket for healthcare in America is prohibitively expensive.

On Average, How Much are Out of Pocket Medical Expenses in Retirement?

With Medicare’s limitations, it becomes crucial to budget out how much you may need for any potential medical expenses while in retirement. You can look at the healthcare industry and recognize that a visit to the doctor for antibiotics could cost hundreds of dollars, and a trip to the ER to X-ray a hurting ankle could be thousands. Medicare is great, but it’s realistic to assume that without supplemental support you could pay thousands or even tens of thousands a year in medical bills.

Here is an article estimating what healthcare will cost in the future.

This is why it’s so important to “fill the donut hole” that Medicare leaves, as you simply can’t afford to take chances with your health. Taking out supplemental coverage is going to increase your costs, but in comparison to the astronomical average cost of paying out of pocket for medical expenses in retirement, it’s clear that it’s crucial to find ways to minimize the costs.

There are other ways to provide the resources you’ll need for the requisite amount of health insurance. One such method is to reduce other expenses where you can, as this will free up your resources in general. None of us want to travel less or spoil grandkids less — isn’t that the whole point of retirement? But you could sell a second car you rarely use, recovering those maintenance and insurance costs. Or you could downsize your home to access the equity that’s been building up in the property for years or even decades to provide a nest egg for when needed.

Here are other tips for saving money after retirement.

An even better method for maximizing your financial resources is to move to a retirement community after selling your home. As retirement community living is often more cost efficient than living on your own — community fees will include maintenance, utilities, dining, even extra expenses like access to a swimming pool and fitness center — the difference in your expenses can be put to better use by ensuring your healthcare coverage is as complete as you need it to be. You’ll no longer have to worry about paying property taxes, and your monthly expenses are rolled up into one payment instead of having to manage half a dozen or more different utility bills.

Why Retirement Communities are Often the Best Choice 

There’s more than just one advantage of moving to a retirement community when it comes to providing for medical costs.

It’s true that retirement community living is often more cost efficient in general, but the true benefit is when you take into account the types of services that continuing care retirement communities (CCRCs) offer their residents.

CCRCs provide comprehensive healthcare coverage at a fixed cost. That means there is one aspect where you don’t have to worry about budgeting for out-of-pocket medical expenses. Should you ever need a higher level of care such as assisted living, that could balloon your monthly costs to several thousand dollars a month. At a CCRC, after paying a single entrance fee, your ongoing rate will never change solely because your level of need changes. Your cost for health service is locked in.

This benefit simply can’t be overstated. Healthcare costs, much like everything else, increase steadily every year. That leads to the unfortunate truth that you’ll be paying more for your healthcare the longer you live – unless you take steps to manage those rising costs. A CCRC is the most reliable way to accomplish this, as you’ll never have to worry about changes in medical costs pricing you out of advanced health services.

Finally, the benefits of moving to a retirement community go much further than simply excellent health options. Often functioning like resorts in which you live, the best options come with dozens of amenities that enhance senior living in a multitude of ways. Everything from walking trails, fitness centers, and swimming pools to clubhouses, game rooms, art studios, fine dining, and excursions are all available to retirement community residents, providing an environment where you can truly enjoy your senior years to the fullest.

How to Keep Medical Costs Low During Retirement

Coming up with ways to cope with your estimated medical expenses while in retirement doesn’t have to be a challenge. With just a little forethought, you can ensure you’ll have the resources you need to support yourself while retired without having to worry about any unforeseen medical costs. You can do so by following the recommendations above as well as through other methods, such as maximizing your retirement savings through investment activity.

If you have questions about your estimated medical expenses while in retirement and are looking for strategies to ensure you can pay those costs without worry, it’s always best to turn to those who have the answers. You should always feel free to talk to an expert at one of the 27 communities of Acts Retirement-Life Communities. We’re here to ensure that older retirees are able to enjoy their life to the fullest with complete peace of mind that they will be taken care of no matter what.

Explore our communities now.

Or speak directly with a retirement living expert.

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