Retirees worry whether they'll be able to pay their medical bills
According to recent research from Fidelity Investments, almost seven in 10 (68%) of those approaching retirement said rising health care costs is one of their three biggest financial concerns (outliving savings and inflation being the other worries).
Fidelity Investments recently released its annual estimate of the lifetime, out-of-pocket costs for medical bills for a couple, both age 65, retiring in 2011. This year’s number — $230,000 — is down $20,000 from 2010’s estimate of $250,000.
Fidelity's estimate is a projection of what an average couple would need. Actual costs will vary widely, of course, depending on a couple's medical needs and how long they live. The study assumes no employer-provided insurance in retirement, and a life expectancy of 85 for women and 82 for men.
While a lot of attention is being paid to this more-than-unexpected drop, the Fidelity researchers were careful to portray this reduction as a one-time event, and they clearly expect medical costs to resume increasing in the future.
Fidelity attributed the one-time reduction to last year’s passage of Obama’s health care reform act, which reduced expenses for prescription drugs.
While these are U.S. figures, the Canadian experience may not be as different as many would like to believe, according to a recent C.D. Howe Institute report.
Canada can't keep spending on health care at its current rate, and must choose between a number of unpopular options for its state-funded medical system, says David Dodge. Health care spending would rise from 12 per cent of GDP in 2009 to 19 per cent in 2031 if spending kept growing at its current pace.
This would force Canadians to choose between a combination of a sharp cut in other public services, higher taxes, more private spending or a degradation of health care standards in the public sector, he maintains.
Looking ahead, do rising medical expenses concern you? What steps are you taking to soften the blow?
By Gordon Powers, MSN Money
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