You will only have this Social Security amount left after you pay your medical bills in retirement

SmartAsset: How much retirement income will you have after paying medical expenses

SmartAsset: How much retirement income will you have after paying medical expenses

Retirees face sizable out-of-pocket costs for premiums, copays, and unexplored services. One way to assess this burden is to look at how these medical expenses eat into their Social Security benefits and other income. Here’s a look at how much these expenses will reduce your retirement income and some of the options you have to improve those reductions. One Financial Advisor can help you protect your retirement from medical and other expenses.

How much medical expenses cut into retirees’ income

Retirement income can come from a variety of sources. the most famous is Social Security, but it can also come from annuities and other insurance products, tax-advantaged plans like IRAs and 401(k), profit-sharing plans, and asset sales, including stocks. . While there are many sources of income that retirees can draw on, that income can take a big hit from medical expenses.

The Retirement Research Center at Boston University analyzed data from the 2018 Health and Retirement Study to calculate its share of Social Security benefits and total disposable income for non-medical spending. The center also explores how this measure varies by gender, age, health status, income, and additional insurance.

What the researchers found was that for the average retiree, out-of-pocket medical costs, including premiums, cost-sharing, and unexplored services (excluding long-term care) ), leaving only 75% Social Security benefits available for other costs. That rate is lower for women and those in low-income households.

Who was hit the hardest?

SmartAsset: How much retirement income will you have after paying medical expenses

SmartAsset: How much retirement income will you have after paying medical expenses

For women, the remaining average is 72% of Social Security benefits compared with 78% for men. That’s not because women pay significantly higher medical costs than men – their premiums are slightly lower and their other out-of-pocket expenses are slightly higher – but because they have Social Security benefits are significantly lower. Among retirees who spend the most, 5% of retirees have only 11% of their benefits left after out-of-pocket expenses. Even at the 10th percentile, retirees spend all but a third of their benefits on out-of-pocket expenses.

Culprit? Insurance fee for Medicare Part NO – on the rise – Part D, Medicare Advantage and supplemental plans, including retiree health care coverage, make up the largest share of health spending for most retirees, with the exception of those highest spenders.

How to cut health care costs

Have Various ways to reduce medical costsbut three stand out.

Eat and exercise. Exercise and a balanced diet low in salt, saturated fat and sugar can keep you fit and slim. Doing so can also prevent diabetes, heart disease, obesity and will also keep your immune system strong. It may seem like a daunting task, but even a little exercise every day can have a profound impact. Recent research shows that a short period of intense exercise followed by a period of rest can significantly increase your fitness level. Even seven-minute workouts have been shown to have a positive impact on your health.

Eating a mostly plant-based diet while adding small amounts of meat (flexitarianism) and dairy has many proven benefits:

  • Lose excess weight and maintain ideal weight

  • Reducing stress on the environment

  • Tame your cravings for junk food and snacking

  • Stretch your dollar

Quit smoking. You know how horribly harmful cigarettes are to your health and how expensive that pack is. Whatever you have to do to stop this habit, it will be worth it not only to your heart and lungs but also financially. You can potentially avoid healthcare costs and save money on a daily basis. If you’re a smoker, you can start saving money right away by choosing not to smoke. All those who love you will breathe easier, both you and your wallet.

Flexible spending account. contribute to a flexible spending account (FSA) can help you pay for out-of-pocket medical expenses when you need them, and the FSA is exempt from federal taxes and Social Security. In some cases, the FSA even evaded local and state income taxes. Check with your employer to see if this is an option for you.

bottom line

SmartAsset: How much retirement income will you have after paying medical expenses

SmartAsset: How much retirement income will you have after paying medical expenses

The Boston University Center for Retirement Research found that with a significant portion of retirees’ incomes going toward medical expenses, their finances are more precarious than they are. Social Security benefits alone can recommend. With out-of-pocket healthcare costs cutting available retirement income and Part B premiums rising, it’s understandable why many retirees may find it difficult to make ends meet. Fortunately, there are free options retirees can use to ease financial squeezes.

Retirement advice

  • Cutting medical costs is only half the battle; income growth is the other half. A financial advisor can help you increase your income. Finding a qualified financial advisor is not difficult. SmartAsset’s free tool connects you with up to three financial advisors serving in your area, and you can interview the right advisors for you for free to decide which one is right for you. If you are ready to find an advisor who can help you achieve your financial goals, start right now.

  • Use SmartAsset for free retirement calculator See how you are preparing for retirement.

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