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An average healthy 65-year-old American couple retiring this year can expect to pay $387,644 in today’s dollars for health care over their lifetime, HealthView Services reported this week. It’s a staggering sum, but making some financial and lifestyle changes ahead of retirement can help reduce and offset the costs, according to the firm.

Total lifetime costs include premiums for Medicare Parts B and D, dental and supplemental insurance, plus all out-of-pocket outlays for medical, dental, hearing and vision.

According to the HealthView Services white paper, these costs will be much higher at the end of retirement than at the beginning. In 20 years, the couple will pay an estimated $34,268 in future dollars for their premiums and out-of-pocket expenses — excluding long-term care costs — up from $12,286 this year.

The paper noted that the average projected life expectancy for women and men was 89 and 87.

If the news is bad for today’s retirees, it’s worse for 40- and 50-year-olds who expect to retire at 65 because of compounding health care inflation, projected to be 4.4%: for the former, $455,866; for the latter, $405,241.

The paper projects that annual costs for healthy Americans will, on average, be lower than for those with health conditions. But because they are expected to live longer, the average lifetime health care costs they need to plan for will be higher.

Take a healthy 55-year-old woman who lives to 89. She will need to plan, on average, for $424,875 (future value) in lifetime health care costs. If she has Type 2 diabetes, her actuarial longevity will shrink by nine years, as will her projected total costs, to $266,163.

Since health care costs will be the highest at the end of retirement, living longer than actuarial averages will significantly increase expenses. For a 45-year-old couple, living two years longer will add $172,273 in future dollars to their health care bill.

“Americans are not powerless when it comes to planning for future health care costs,” according to Ron Mastrogiovanni, chief executive of HealthView Services and HealthyCapital. “Taking steps to improve health can reduce annual medical expenses.”

To reduce their retirement burden, Mastrogiovanni said, they can invest the savings, increase contributions to retirement plans and work with an advisor to optimize product selection with health care in mind.

HealthView Services said in a statement that it draws on 530 million health care cases and actuarial, government and economic data to project retirement health care costs. The final calculations draw upon, and are consistent with, government health care inflation forecasts.

What Pre-Retirees Can Do

Simple behavioral changes, including taking medication as prescribed and reducing salt intake, would enable a 45-year-old man with high blood pressure to lower his annual pre-retirement health care costs by an average of $3,651, according to the paper.

If he invested these savings, he could increase his retirement assets at age 65 by more than $110,000, assuming a 6% rate of return, while extending his life expectancy by more than two years.

The report highlights the importance of investing to generate cash flow through retirement to match rising health care expenses. Use of HSAs, Roth 401(k)s, Roth IRAs and certain insurance products and annuities can reduce the effect of Medicare surcharges.

The ongoing savings or lump-sum investments needed to address future health care needs can be achieved by taking advantage of the benefits of compounding returns, according to the paper.

A 50-year-old man who has not saved for health care would need to put aside $7,129 a year before retirement at age 65 to cover his future Medicare B and D and supplemental insurance (Plan G) premiums.

Alternatively, he could contribute an additional $183 every two weeks to his 401(k), assuming a 6% return with a 50% company match, to cover these future premiums.

The paper notes that although individuals who are on track to meet the industry’s standard 80% income replacement ratio target are addressing a portion of their future health care needs, they will still have to increase contributions for health care to avoid falling short on their planning goals.

Why? When they were working, they had to pay for only about 25% of their premiums, with their companies making up the difference. In retirement, they will have to pay for 100% of premiums.

Additional biweekly contributions required to close the gap between what they saved and actual future health care expenses would be $120 for a 50-year-old man.

“Health care must be incorporated into the retirement planning process, and not simply because it is a significant expense that all Americans will face,” Mastrogiovanni said.

“Costs must be understood and managed within the context of existing savings, health conditions, Social Security benefits, investment choices, and other retirement factors so working Americans can generate enough income to cover future health care needs.”

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