If you expect Social Security benefits to cover the majority of your expenses once you retire, you’re in for a rude awakening.
While the Social Security Administration’s retirement income will surely assist you in your later years, it will not be sufficient to meet all of your needs.
In fact, according to a new analysis, if you get close to the average Social Security income, one significant item you confront as a senior could take up about a third of your total benefits check.
A doctor administers medical care to a patient.
This significant expense may leave you with little left over from your Social Security payment.
According to a December 2021 AARP research, retirees with standard Medicare spent an average of $6,168 per year on insurance premiums and medical expenses.
Given that the average Social Security benefit in 2022 is just $1,657 per month — or $19,884 per year — a retiree with a typical benefit and average medical expenses might end up spending just over 31% of their Social Security check on out-of-pocket medical expenses.
Many seniors are taken aback by this, especially because they believe that the government-provided Medicare insurance will cover the majority of their medical requirements. It’s also a shock that can devastate your finances if you weren’t expecting such a large charge and were counting on Social Security benefits to help you pay your other expenditures.
What can existing retirees do to deal with Medicare’s unwelcome surprise?
Unfortunately, if you’re already retired and have medical expenses that are more than expected, you don’t have many options. As a senior, it’s too late to go back in time and save more for medical care.
But that doesn’t rule out the possibility of saving your retirement. You might want to do the following steps:
During Medicare open enrollment, shop around. Traditional Medicare has alternatives, such as Medicare Advantage Plans. You can also supplement conventional Medicare with a Medigap plan to offset some of the gaps in coverage. While choosing more extensive coverage than regular Medicare may result in higher premiums, these plans may also result in lower out-of-pocket expenditures when you need care during the year.
Check to see whether you qualify for Medicaid. If your income and resources are low enough, Medicaid may be able to provide you with additional medical coverage. Medicaid can occasionally cover things that Medicare doesn’t, lowering out-of-pocket payments.
Consult your physician. Your health-care practitioner may be able to assist you in finding lower-cost medicines or taking advantage of Medicare-covered treatments. Your doctor can also assist you in developing strong preventative care routines to help you avoid significant — and expensive — medical problems.
What options do future retirees have?
This startling data on Medicare expenses should serve as a reminder to those who haven’t yet retired that healthcare spending must be factored into their retirement planning.
You should set aside a certain amount to cover these retirement expenses, preferably in a health savings account, which offers additional tax benefits if you’re saving for medical expenses.
By budgeting for medical expenses ahead of time, you won’t be caught off guard when you require expensive medical treatments. You can make sure your money lasts throughout your retirement years, even if you have a lot of medical costs.