High Healthcare Costs Threaten Baby Boomers' Retirement Plans
It's no secret that healthcare in the US is among the costliest in the world. As per the Peter G Peterson Foundation, the total spending in US healthcare reached an astounding $4.5 trillion, which averaged $13,493 per person, in 2022. Amid soaring prices, many baby boomers (people born between 1946 and 1964) feel they won't be able to leave anything for their kids. Judi and David Koncak, for instance, lived a good life, traveling, earning, and saving for retirement.
"I thought we’d spend our golden years sitting on a beach in Hawaii with Mai Tais, even if in wheelchairs,” Judi Koncak, 83, told USA Today.
Instead, the two are now struggling to pay for healthcare, after David had a stroke, and a few surgeries and was diagnosed with prostate cancer. With all their savings gone, Judi suspects that they will only have their house for their kids, which she's "not even sure until we get repairs done if they would even want it," she told the publication.
Such is the story of many Americans who fear that they may go broke after retirement because of healthcare. Kaiser Family Foundation (KFF), a non-profit in the US focused on healthcare, found in a recent poll that about half of the adults in the country say they will struggle with healthcare costs in the future, with one in four saying that they have witnessed a family member in their household struggling with healthcare bills in the last 12 months.
"One of the biggest factors that drive wealth depletion during retirement is health care costs, including rising out-of-pocket costs for medical treatment and the probability of needing long-term care later in life,” says George Schein, technical director for Advanced Consulting Group, in a Nationwide Retirement Institute research report.
The KFF poll also found that one in four adults in the country is currently skipping or simply postponing getting healthcare, because of the sky-high costs, with a whopping 61% of the respondents saying that they skipped healthcare in the last 12 months.
With baby boomers becoming at least 65 by 2030 and owning around 52.8% of the wealth in the US, researchers are expecting to see a generational wealth transfer of up to $84 trillion in assets in the next two decades. The Gen X, Millennials, and Gen Z, are expected to inherit $72 trillion of the total calculated amount, and the rest is expected to go to charities. However, a report by Nationwide Retirement Institute found that more than 25% of US citizens feel that paying for their healthcare in the long term will diminish their children's inheritance substantially.
In another report by KFF, it says, that since the change of the millennium in 2000, the overall cost of medical care, including insurance, drugs, and equipment has increased by 114% surpassing the 81% in the overall prices. A report by Gallup shed light on how almost everyone is struggling to pay for healthcare, irrespective of their income. The report found that over 20% of households with income of more than $120,000 skipped medical care, due to the cost, hinting towards the need to start planning for retirement and inheritance.
According to Motley Fool, there are many ways one can save on healthcare, to maintain wealth even after 65. For starters, one needs to work on changing the mentality of saving on the medical insurance itself. Many tend to opt for the cheapest health insurance, which ends up adding to the medical bills later on. It's also worth noting that, health benefits tend to help save a lot of money when understood thoroughly. Additionally, changing medicines can also help save a lot of money. Ask your doctor to prescribe alternatives for the drugs that might work for your ailment.