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Do You Have Enough Set Aside In Your Retirement Savings To Pay For Your Future Healthcare Needs?

Written By: Doug Wright | The Wright Group

According to a recent study conducted by Aviva USA, a leading life insurance company, in partnership with the Mayo Clinic, 9 out of 10 people who responded to the questionnaire said that about 20% of their retirement savings will go toward medical expenses (i.e. insurance payments, co-payments and treatment). The actual amount will obviously depend on your daily activity and health history but most retired people will spend about a third (33%) or more of their retirement savings on healthcare related expenses. The study also revealed that retirees will most likely go to the doctor’s office more often and for more serious issues than when they were younger, active and working.

Dr. Philip Hagen, Medical Director of Mayo Clinic’s Embody Health and vice chair of the Division of Preventive and Occupational and Aerospace Medicine at Mayo Clinic, indicated that “consumers today often underestimate their future healthcare expenses and are very unrealistic about repercussions of life choices and aging.”

The Wright Group councils their future retirees to understand that the cost of medicines and medical services are increasing faster than inflation.  Your personal retirement savings account needs to have the flexibility to access medical emergency funds if needed yet not lose the features of a lifelong income stream. Remember, during your retirement years life will still throw its little surprises such as a health issue for you or a loved one. So stay flexible, expect medical premiums and deductibles to increase and benefits to decrease. Make your retirement savings portion you have estimated to use during your golden years for medical purposes work as hard as it can to generate monthly or annual income and still allow you to have the ability to access it if the need arises.

Our clients have benefited working with an independent agency, such as The Wright Group, because we can offer them an unbiased opinion that fits their individual needs which is very valuable in the planning process.

We can already see the beginning of the extra strain on the medical system.

With the ten thousand baby boomers turning 65 everyday and nearly eighty million becoming 65 by the year 2020 along with the changes that will start in 2014 with Obama Care, services and entitlements are going to be harder to get, and in my opinion, not any cheaper. In addition to this, if something catastrophic happens to you or your spouse this could cost hundreds of thousands of dollars to pay off.

To quote my father-in-law, Merlin Horn, “Medicare and Social Security is the third rail in politics”, meaning anyone who takes on reducing or changing the current benefits must understand they are going to be met by one of the strongest lobbies in Washington to replace them in their next election.  As everyone who watches the nightly news knows, this issue is a hot potato and is often used as a campaign scare by one candidate about another. I, for one, do not believe that Medicare is always going to pay for the same things they pay for now or at the levels they are currently paying. Healthcare planning, like retirement planning, has been transferred back to the individual to manage and pay for. Many of my friends and clients, who are doctors, are concerned that they will have to scale back on their quality of care because the new governmental plan dictates what they can and cannot do and what is and is not covered.

Planning for this change in the future needs to start now.

With today’s retirees, retirement planning will need to plan for income 20, 30 or 40 years in the future and include something that will pay an income for life and increase your annual household income to help offset inflation.   Having been in the business of financial and retirement planning for almost thirty years, I have had the privilege of seeing people at all stages of life, from starting an IRA to retiring with a sizable 401(k). Some have planned well and others have had health, family or aging issues that have dug deep into their savings. I feel the next biggest danger to not planning well enough is going to be as President Ronald Reagan said, “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man” and when that happens, the effects on our seniors could be catastrophic.

If you feel unsure about your retirement plan(s) or are looking for some guidance, please feel free to call Doug Wright at The Wright Group (805) 231-4238.  Be sure to visit our video website ( for educational videos and valuable articles.

Annuity123 is an educational platform only.  Annuity123 does not offer insurance, investment, or tax advice.  You should always seek the guidance of qualified and licensed professionals concerning insurance, investment, or tax matters.

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