A new survey from the Employee Benefit Research Institute indicates that over 50 percent of people nearing retirement age don't know if they've saved enough to cover future health care costs. As most West Palm Beach residents know, the costs of health services are only going to increase in the future, with rate of medical care inflation being between five and seven percent. Because of this, individuals making an estate plan must take into consideration the cost of future health care when determining the sufficiency of their retirement income.
According to the Employee Benefit Research Institute, an average retired couple can expect to pay over $160,000.00 in out-of-pocket medical expenses, not including long-term care. As with all averages, this figure only gives about a 50 percent chance of actually covering the health care costs of any actual couple. Therefore, it is obvious that healthcare expenses are an essential part of any retirement income plan.
It is important for an individual to determine when he wants to retire, what his current health condition is, his life expectancy, the cost of health care in the planned location of retirement and whether any employer benefits will continue after retirement. Those with significant health issues need to build in higher income rates to their plan to account for those expenses.
Estate planning is not only about where one's wealth goes after death. It should also be concerned with making the last part of an individual's life as secure and fulfilling as possible. This can be done through living wills and medical directives, ensuring that one's wishes with regard to life quality are implemented, but further, it needs to account for one's ability to pay for those things that affect quality of life. One's health is the largest factor in determining one's happiness, and planning for it is essential.
Whether by purchasing long-term care insurance, building extra income into a financial plan, or utilizing a Health Care Savings Account, the estate plan must take one's potential health care costs into account.
Source: CNBC.com, "Don't Take Retirement Health-Care Costs Lying Down," Rodney Brooks, April 23, 2013