Will You Be Able to Afford Healthcare in Retirement?
According to the report on the National Health Expenditure Projections 2016-2025 produced by the Centers for Medicare and Medicaid Services, national health spending is projected to grow at an average rate of 5.6 percent per year for the foreseeable future.1 This projected statistic is almost triple the U.S. inflation rate of 1.9 percent from 2012-2016 2 and almost double the annual projected Social Security cost-of-living adjustment (COLA) of 2.6 percent.3
How realistic is it to “self-fund” health care costs through investing in the stock market? With technological breakthroughs, Americans are living longer and longer, even when they’re exceptionally ill. The chances of needing long term care increases with longer age spans. Health care costs will be the most significant outlay for many people in retirement. Millions of Americans will not be able to afford health care, leaving them on the Government Plan. That will constrain limited resources for everyone else. Our Potential Financial Solution will account for the possibility of extreme health care costs and will not involve you depending on the Government Plan.
The Milliman Medical Index is a yearly study that documents the cost of health care. In 2018, the cost of health care of a typical family of four was $28,000. This was up 21% from 2014, when the cost was still a staggering $23,000, and up 55% or 7% per year from 2010 when it was $18,000.
Medicare is in the red.
Medicaid is in the red.
According to the 2018 Social Security Trustee Report:
“Both Social Security and Medicare face long-term financing shortfalls under currently scheduled benefits and financing.”
While Social Security and Medicare accounted for 42% of Federal program expenditures in fiscal year 2017, the Social Security trust funds will be depleted by 2034. Their conclusion is that beyond 2034, Social Security taxes will only be sufficient to pay 75% of scheduled benefits. Medicare’s Hospital Insurance Trust Fund (HI) is projected to be exhausted by 2026. The Trustees urge lawmakers “to take action sooner rather than later to address these shortfalls, so that a broader range of solutions can be considered and more time will be available to phase in changes while giving the public adequate time to prepare.”
A Couple of Questions to Consider
When the government provides an economic projection, does it tend to be overly optimistic or overly pessimistic? When they say a government program will cost $100 billion, does the actual cost tend to skew more towards $90 billion, or towards $500 billion? If you say $500 billion, then we're with you.
What do you think the chances are that politicians are going to follow the Trustees’ advice and take action sooner than later? Perhaps they’ll get right on this, along with congressional term limits.
A recent study by the Institute of Medicine determined that of $3 trillion in healthcare costs, $750 billion, or 25%, goes to waste and fraud. What is the incentive of those people benefiting from waste and fraud to fix anything? Don’t they actually pay politicians and lobbyists to keep the status quo?
With all these problems, could health care become unaffordable for millions of Americans, if it isn’t already? Even assuming you can personally shoulder all the health care costs for you and your family, where do you think they’re going to get the money for the people who can’t afford health care – from those who don’t have money, or from those who do?
What you can control is the “time to prepare.” What if there were a way to set aside money to provide for long term care, money that would grow on a guaranteed basis, that would never be taxed again, and yet, if you didn’t need the money for long term care, you wouldn’t be out a dime?
Let us show you how to do it!