In the popular imagination, Social Security supplements the income of the elderly and Medicare pays their health insurance.
But a comprehensive new report on retirement health care warns that the expected increase in health care expenses for seniors will nearly swallow the average Social Security benefits Americans often depend on for retirement income.
Indeed, the 2015 Retirement Health Care Cost Data Report, released Wednesday by HealthView Services, is warning that a couple aged 66 today—and thus eligible for full retirement benefits—can expect health care costs to eat up 67% of their lifetime Social Security benefits.
And that projection assumes the couple has optimized their Social Security benefits, and is exclusive of long-term care.
The implication is that middle-class Americans without significant supplemental retirement savings might be facing tough choices between fulfilling their retirement dreams and paying their all-too-real health-care expenses.
The problem is expected to be all the more acute for younger Americans because of a projected health care inflation rate of approximately 6.5%.
Thus, a couple retiring in 10 years at the age of 65 can expect health care expenses to subsume about 90% of their lifetime Social Security benefits.
Only those unfortunate enough to face serious illness will catch a financial break, since their shorter life expectancy is projected to significantly trim their lifetime health care costs.
Thus, the lifetime health care tab for a healthy 55-year-old male can be expected to reach $223,000 based on his life expectancy of 86, yet his Type II diabetic counterpart's life expectancy of 76 translates to a lifetime health care costs of $118,000.
In calculating health care costs, the HealthView Services report generally includes Medicare Part B and D and supplemental insurance. The advisor-oriented provider of retirement health care data and planning tools estimates those costs to add up to $266,589 on average for a 65-year-old couple retiring today and at $320,996 for a couple retiring at age 65 10 years from now.
