It's a big misconception that living costs drop drastically in retirement. The reality is that some of your expenses might get lower, but some might also rise. Show
Healthcare is likely to fall into the latter category. That's because medical issues tend to arise as we age, and also, because Medicare, which seniors commonly rely on starting at age 65, has its limitations. In fact, Fidelity recently ran some numbers, and it found that the average 65-year-old male-female couple retiring now should expect to spend a whopping $315,000 on medical costs. That figure assumes enrollment in Medicare Parts A, B, and D. When we break that figure down further, we see that the average 65-year-old male should expect to spend $150,000 on healthcare costs throughout retirement, while the average 65-year-old woman should anticipate spending $165,000. Since women tend to live longer than men, that higher number makes sense. SUBSCRIBE TO OUR NEWSLETTER: The Daily Money delivers our top personal finance stories to your inbox It's also worth noting that last year's Fidelity estimate had the average opposite-gendered 65-year-old couple spending $300,000 on healthcare in retirement. That means that figure jumped $15,000 in a single year. It also underscores the importance of saving for future healthcare costs to avoid a financial crunch later in life. The best way to save for healthcare in retirementWhen it comes to covering healthcare costs later in life, you have options. You could pad your IRA or 401(k) plan so you're better equipped to pay your future medical bills, or you could dedicate funds to healthcare in a health savings account, or HSA. The latter route is worth exploring if you're enrolled in a high-deductible health insurance plan and are therefore eligible to fund an HSA. That's because HSAs offer more tax benefits than IRAs and 401(k)s. Rx FOR RETIREES: How seniors can survive stock plunges, inflation and rising rates HSAs are triple tax-advantaged:
Meanwhile, HSA limits change from year to year, but this year, you can contribute up to $3,650 if you have self-only coverage, or up to $7,300 if you have family level coverage. If you're 55 or older, you can make catch-up contributions in your HSA, adding $1,000 to whichever limit applies to you. Next year, those limits are increasing. For self-only coverage, you'll get to contribute $3,850 to your HSA. For family level coverage, you'll get to contribute $7,750. And that $1,000 catch-up will still be in play. Another thing you should know about HSAs is that come age 65, they effectively convert to a traditional retirement plan. Normally, the penalty for taking a non-medical HSA withdrawal is steep -- 20%. But once you turn 65, you can take non-medical withdrawals without being penalized. In that scenario, you'll simply pay taxes on your withdrawals, the same way you would with a traditional IRA or 401(k). GAS PRICES HIT RECORD HIGHS, AGAIN: Average cost per gallon over $4 nationwide Spare yourself unwanted stressHealthcare costs are a burden for many seniors -- but that doesn't have to be the case for you. If you set yourself up with a nice chunk of money to cover your future medical bills, you'll have one less thing to concern yourself with at a time in life when you're trying to enjoy your newfound freedom. Offer from the Motley FoolThe $18,984 Social Security bonus most retirees completely overlook: If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $18,984 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies. The Motley Fool has a disclosure policy. The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY. Whether you’re in charge of a household or single and in charge of only yourself, most of us have a budget. Each month we hold ourselves accountable to pay for rent, utilities, groceries, car expenses, credit card bills, and more. While some of these obligations are easy to estimate, the cost of medical care can be a little trickier. Below are several factors that influence healthcare premiums and will help you determine how much health insurance may cost per month. How Much Is Health Insurance per Month for One Person?Monthly premiums for Affordable Care Act (ACA) Marketplace plans vary by state and can be reduced by subsidies. The average national monthly health insurance cost for one person on an Affordable Care Act (ACA) plan without subsidies in 2022 is $438.1 Wondering how insurance premiums are decided? The Affordable Care Act ensures that insurance companies cannot discriminate based on gender, current health status, or medical history. Here are factors that determine health insurance premiums.  AgeWhile some states, specifically New York and Vermont, do not use age when determining health insurance premiums, this is a major contributing factor for most states. The age of 21 is used as the base age, with premium costs being adjusted upwards for those in their thirties, forties, fifties, and sixties. Around age 53, the premium rate becomes more than double the base rate. TobaccoTobacco use will affect how much health insurance costs you per month. In fact, health insurance companies can charge smokers up to 50% more than non-tobacco users. While some states have elected not to allow insurance carriers to charge smokers the maximum allowed, tobacco use does still affect pricing. LocationLocation affects the price of the premiums, too, mostly due to the amount of (or lack of) competition in a particular area or region. While competition can be intense in populated areas, rural parts of the country may only have one or two insurance companies, making pricing higher for these residents. Plan CategoryFinally, your choice of plan will also influence the average health insurance cost per month. Plans are broken down by metal tiers: Bronze, Silver, Gold, Platinum and Catastrophic. Each carries different premiums based on what percentage of overall healthcare costs they cover. Premiums are also affected by the plan’s deductibles, copays, coinsurance, and number of family members on the plan. The national average health insurance premium for a benchmark plan in 2022 is $438, according to the Kaiser Family Foundation.1 A benchmark plan is the average premium for each state’s second lowest cost silver plan. The following data reflects the national average, and each state’s average, but does not include any reduction in cost from subsidies. Rates will vary by area.1 Average Monthly Health Insurance Premiums for Benchmark Plans by State Without a Subsidy
How Much Does Health Insurance Cost per Month in Each State With a Subsidy? The estimated national average cost in 2022 for a silver plan after a premium subsidy* is applied is $66.72. This chart, unlike the previous one, takes into account subsidies. Here, you can find the average monthly premium with subsidies, for a benchmark silver plan in a select city within your state. Monthly Health Insurance Rates by State With a Premium Subsidy2(40-year-old making $30,0000 per year)
How Much Is Family Health Insurance per Month?The average monthly premium for employer-sponsored family health coverage in 2021 was $1,851.75, according to the Kaiser Family Foundation.3 Like individual insurance, your family cost will depend on ages, location, plan category, tobacco use, and number of plan members. What Is the Least Expensive Health Insurance?As you can see from the factors listed above, there’s a lot that goes into determining the price of insurance. There isn’t a single healthcare plan that’s right for everyone. But finding the right plan for your needs can be easy with HealthMarkets. You can shop online, compare healthcare plans, and apply in minutes. You can also call (888) 986-2752 to speak with a licensed insurance agent. 46698-HM-0222 References: How much does the average retiree spend on healthcare?According to a report by HealthView Services Financial, a healthy 65-year-old couple retiring in 2021 can expect to spend more than $662,000 for retirement health care costs.
How much do I need to budget for health insurance in retirement?How much is needed for health care costs in retirement? According to the Fidelity Retiree Health Care Cost Estimate, an average retired couple age 65 in 2022 may need approximately $315,000 saved (after tax) to cover health care expenses in retirement.
How much does the average retiree pay for Medicare?The Center for Medicare and Medicaid Services estimates that the average monthly premium will be $19 in 2022, down from $21.22 in 2021.
Which is the best health insurance policy for senior citizens?Best Health Insurance Plans for Senior Citizens. |
Average monthly cost of health insurance for retired couple
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