Planning for retirement is tough, but budgeting for healthcare can feel like navigating a financial minefield. A new study by the Employee Benefit Research Institute (EBRI) throws another log on the fire, revealing that savings targets for Medicare beneficiaries just reached a new high in 2023.
Some Couples Could Need as Much as $413,000 in Savings
Some couples, the study says, might need a whopping $413,000 stashed away to cover their golden years healthcare expenses. Sounds scary, right? Don’t panic; there’s more to the story.
EBRI’s researchers built a fancy simulation to predict how much future retirees might need to save for healthcare, accounting for both the Grim Reaper and the whims of the stock market. They also factored in the recent tweaks to Medicare Part D thanks to the Inflation Reduction Act of 2022.
Here’s the Gist of Their Findings:
- Target hike: Saving for healthcare in retirement just got slightly pricier. Last year, a couple needed $383,000 to have a 90% chance of covering their medical bills. This year, it’s $413,000 for some pairs.
- Gender gap: Ladies, listen up. Women need to save about $184,000 on average to be 90% sure they’ll have enough for healthcare, while men need $217,000.
- Medicare Advantage to the rescue?: Switching to Medicare Advantage can significantly lower your savings target. An average man using this plan with moderate drug needs might only need $99,000 saved, while a woman would need $116,000. But remember, there’s a catch! These plans often have limited networks or require prior approval for certain meds or services.
The bottom line? Healthcare costs in retirement are a serious beast, especially for couples and those reliant on traditional Medicare. However, there are options like Medicare Advantage that can offer some breathing room. Just remember, every plan has its trade-offs.
So, before you retire blissfully into a hammock, do your research, compare plans, and adjust your savings goals accordingly.
After all, who wants to spend their golden years worrying about medical bills?
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