Federal Budget Committee President Maya MacGuineas discusses the country’s debt as inflation drives interest rates higher and Biden’s handling of the economy.
Health care costs are increasing rapidly for Americans in retirement.
A new estimate by Fidelity Investment released Monday shows that the average 65-year-old couple retiring this year can expect to spend an average of $315,000 on health care and other related medical expenses during their retirement spend expenses. That’s a sharp increase from last year, when Fidelity predicted that most couples would spend an average of $300,000 in retirement.
INFLATION RISES 8.3% IN APRIL AND FLOWS NEAR A 40-YEAR HIGH
Much of the increase this year came from steeper Medicare Part B premiums for Americans age 65 and older. Medicare imposed a 14.5% premium increase for Part B, outpatient health insurance, in 2022 — a record high and nearly double the national inflation rate of 8.3%.
Guleford Bobo, 75, collects free Medicare-covered COVID-19 home tests Monday, April 4, 2022 at a CVS in the Navy Yard neighborhood of Washington, DC. ((Tom Williams/CQ-Roll Call, Inc via Getty Images) / Getty Images)
Retirees and older Americans pay $170.10 a month for the Medicare Part B premium, an amount that’s usually deducted directly from Social Security checks.
But Americans don’t necessarily expect to spend as much on health care in retirement, and often don’t make enough money available, Fidelity found. Couples retiring this year expect to spend just $41,000 on medical expenses — well below the $315,000 average; When survey participants were informed of the much higher figure, they were alarmed and felt unwilling to bear that cost in retirement.
Even more worrying is that two-thirds of survey respondents actually believe they would need less than $25,000 to pay for healthcare expenses during their retirement.
However, Americans felt much better prepared if they had invested in a health savings account, which allows individuals to set aside pre-tax money to pay for qualifying medical expenses. The analysis shows that nearly half of HSA holders feel prepared to spend on healthcare, compared to just 27% of those without an HSA.
More than 80 million people — a record number — have health coverage through Medicaid and the Children’s Health Insurance program as enrollments surged due to Covid-19, according to new data released Monday by the Centers for Medicare and Medicaid S (Associated Press / Associated Press )
“By planning early and saving consistently, people can put themselves in a much stronger position to retire how and when they want,” said Hope Manion, senior vice president at Fidelity Workplace Consulting.
The analysis comes as retired Americans face sky-high inflation as the prices of basic necessities like rent, groceries and gas soar.
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The Senior Citizens League, a nonpartisan group focused on issues related to older Americans, recently estimated that Social Security recipients have lost 40% of their purchasing power since 2000 as a result of inflation.
“This is the largest drop in purchasing power since this study began in 2010,” said Mary Johnson, a policy analyst at the Senior Citizens League, which conducted the study.