Rising Health Care Costs - Their Effect on Your Retirement
Medical bankruptcies have increased 20 fold in the last 20 years. How will increasing Health Care costs effect your retirement?
Lately I have read a few articles that confirm a belief that I have held for a while. At any age, unexpected health care costs can derail a person’s finances. As we get older, however, health care and our finances are increasingly delicate issues. “Health or Disability” was cited as a reason for looking into a reverse mortgage by 28% of seniors surveyed, according to an AARP study by Donald L. Redfoot, Ken Scholen, and S. Kathi Brow.
A recent article on MSNBC.com, “Confidence in retirement savings is crumbling” reported that about 22% of workers were worried about “not having enough money to cover medical expenses in retirement.” Twenty-seven percent of workers were worried about long-term care costs. The article also reported that 15% of people that were already retired were worried about medical expenses, and 28% were worried about long-term care.
There are many accounts of people who have lost homes, or declared bankruptcy because of health care costs. Even with health insurance, co-pays and care that is not covered by insurance can still cripple many people’s finances. In “Lack of Health Insurance Leads Many To Bankruptcy” by Kristian Foden-Vencil, Oregon Public Broadcasting, Oct. 3, 2007, Doctor David Himmelstein , an associate professor at Harvard, said that of Americans who file for personal bankruptcy, approximately half cite medical bills as the prevalent cause. According to the article, he also stated that “over the last 20 years, there has been a 20-fold increase in the number of medical bankruptcies.”
Another measure shows that senior citizens are especially vulnerable to the costs of medical care. The paper titled, “How Many Struggle to Get By in Retirement?” by Barbara A Butrica, Dan Murphy, and Sheila R. Zedlewski, re-examines the official measure of the poverty threshold. The authors of the report write that the official poverty measure does not accurately reflect today’s spending needs and economic resources, especially for people 65 and older, whose “resources, needs, and health expenses differ most dramatically from the assumptions reflected in the official measure.”
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