A recent survey from the Urban Institute pins some numbers to just how much health care costs will affect boomers’ retirements. Assuming future costs grow at the rate projected by Medicare trustees, the median annual out-of-pocket costs will more than double between 2010 and 2040, from $2,600 to about $6,200. Furthermore, nearly 10 percent of people 65 and older will spend over $14,000 each year on health care in 2040 when the youngest boomers reach 76.
While health care costs continue to increase, household income is projected to grow more slowly, to about $34,600 in 2040. The disparity between income and the cost of health care will raise the share of household wealth spent on health care from 10 to 19 percent. Even more troubling, the share of people over 65 who will spend more than one-fifth of their income on health care will increase from 18 percent today to 35 percent in 2030 and 45 percent in 2040.