The Future of Medical Expenses in Retirement
Curtis has earned the Life and Health Insurance licensure, has passed the Series 66 examination, and has earned a degree from the University of Nevada, Reno. He has over 20 years of experience in the financial industry, helping others protect, grow and manage their wealth. Curtis helps clients create customized strategies for their portfolios based on their unique financial goals.
THE FUTURE OF MEDICAL EXPENSES IN RETIREMENT
There are two certainties they say that we deal with in life and that would be death and taxes. At this point, we can almost add a third certainty to that list though, and that would be the rising cost of health care. We know that health care and the cost of health care are a concern for many people who are retired and who are coming up on retirement, so what does the future hold for medical expenses? It would be reasonable to anticipate a continuation of the current situation.
HEALTHCARE INFLATION
As of the writing of this article, inflation was up 3.07% in May of 2024 for healthcare costs in the United States; historically the long-term average is slightly over 5%. You can look at the data for yourself here. So, the question becomes, do we believe inflation in medical expenses will continue to stay a bit lower than the proven historical average, or will it resume a pace of said 5%? Either way, it can be easily argued medical expenses will most likely continue to rise over our lifetime and throughout our retirement years.
Now, the question is how do they calculate this specific inflation? I wish it were an easy or a simple solution, however, the US Bureau of Labor Statistics has an entire page dedicated to how to measure the price change in medical care. You can find that here. As you can see, they have a complex and comprehensive methodology that gives its best attempt to deliver an accurate update on the price changes in medical expenses due to inflation. Further, other components may factor into the cost of increased medical expenses, such as labor, geographic location, and severity of condition.
PLANNING AHEAD
How does one plan for the rising cost of medical expenses? Most people now self-insure, and some older long-term care policies exist, but it seems that premiums and benefits continue to change for the worse as far as the client is concerned. And the long-term insurance plans that are still available tend to offer less coverage and are usually more expensive. Some other financial vehicles or tools may help with healthcare costs, but those seem few and far between.
WHERE TO GO FROM HERE
At the end of the day, it is important to meet with your financial advisor and come up with a plan for the rising medical expenses and a plan for addressing it based on the resources available to you and the amount of concern you have surrounding these potential rising costs. If you would like to discuss your options, please reach out to our team at Cornerstone to schedule a meeting. Call us today at 775.853.9033 or click here if you’d like to see how one of our financial advisors could help you.
Based in Reno, NV, Cornerstone is for individuals and families looking to grow wealth, protect and preserve their life savings, and plan for the distribution of their estate in a tax-efficient manner through a tailored strategy. Schedule a time to discuss your financial goals with us.