User:Whaleknives/Medical spending in retirement

 describes the impact medical spending could have on your retirement and how to incorporate it into your retirement planning.

Overview
No other area better illustrates how spending habits change as we grow older. In a 2009 — 2010 BLS survey, households with members age 62 and older reported spending 11.3% of annual income after taxes on healthcare, including insurance. The average for all households, including the elderly, was 6.9%. Medical costs outpaced overall inflation from 1983 — 2012 except for 1996 according to the BLS, and medical costs grew 5.1% annually in that time frame.

From 2006 — 2011 both the experimental CPI-Elderly (62 years and older) and the CPI for All Urban Consumers (CPI-U) rose at the same annual rate of 2.3%. This turnaround was caused by changes in medical care and shelter: the gap between medical care inflation and overall inflation has generally fallen since 2005, and shelter inflation has been rising more slowly.

Health Conditions
Chronic issues like diabetes, heart disease, and congestive heart failure will increase doctor, hospital, and drug spending.

Health Insurance
If you paid off your mortgage before retirement, you probably changed from itemized to standard deduction on your tax returns. After retirement, paying for health insurance alone will move you back to itemized deductions. Although Medicare Part A (Hospital/In-patient) is free, Medicare Part B (Doctor/Out-patient), supplemental insurance, and drug insurance can add up.

Sheepdog, Switching to Medicare -- cost vs health insurance

Switching to Medicare -- cost vs health insurance

Long-Term Care insurance
You may need long-term care if you are unable to care for yourself because of a physical illness, disability, or cognitive impairment, such as Alzheimer’s disease. You can receive long-term care at home or in a hospice, adult day care center, nursing home, or assisted living facility.

Long-term care insurance can help protect your assets against the high cost of extended long-term care. However, long-term care insurance usually only makes sense if you have significant assets to protect. If you don’t have significant assets, you may have to pay for your care out of pocket until you spend down your assets to qualify for Medicaid. 40% of Americans in 2016 paid for long-term care by Medicaid.

Bogleheads&reg; Forum polls in 2013 and 2014 showed only showed 33% overall and 22% of respondents over 50 had long-term care insurance.

To determine whether long-term care insurance is right for you, consider your personal risk factors (life expectancy, gender, family situation and health history), assets, income, costs, and available alternatives.

See Bogleheads&reg; Wiki Long-term care insurance.

Social Security Administration
If you are considering when to collect Social Security retirement benefits, one factor is how long you might live. According to data compiled by the Social Security Administration:


 * A man reaching age 65 in 2016 can expect to live, on average, until age 84.3.
 * A woman turning age 65 in 2016 can expect to live, on average, until age 86.6.

About one out of every four 65-year-olds in 2016 will live past age 90, and one out of 10 will live past age 95.

Retirement & Survivors Benefits: Life Expectancy Calculator, Social Security Administration, retrieved August 5, 2016.

After you use the Life Expectancy Calculator, you can go to:


 * The Social Security Retirement Estimator to get estimates of your future benefits; and
 * When to Start Receiving Retirement Benefits to learn more about the factors you should consider when making a decision about when to start collecting Social Security retirement benefits.

Dr. Thomas Perls - Living to 100
The Living to 100 Life Expectancy Calculator, Thomas Perls MD, MPH, retrieved August 5, 2016.

Abaris - How Long Will I Live?
How Long Will I Live?, Abaris Financial, Inc., retrieved August 5, 2016. Abaris is a registered fixed annuity producer in Philadelphia, PA and licensed in all 50 states and the District of Columbia.

Northwestern Mutual Lifespan Calculator
Lifespan Calculator, Northwestern Mutual, retrieved August 5, 2016.