The High Cost of Growing Older

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One of the comments stated the original Medicare inpatient hospital deductible for 2010 is $1100.00. That is correct, but that is NOT an annual deductible. You could incur this deductible as many as 5 times in the same year, according to how frequently you are admitted and discharged from the hospital that year. There is a 60-day benefit period. If you are admitted as inpatient in January and admitted again within 60 days of the date of your January discharge, you will not owe another deductible for the 2nd admission. However, if you are admitted again on the 61st day (or more) from the date of your January discharge, you will owe ANOTHER deductible of $1100.00. Refer to your "Medicare And You" manual for 2010.

may of AR 8:59PM April 09, 2010

This is one of the most important insurances to have other than life insurance. The younger you are when you purchase it, the less you will pay. If you havent had your life insurance reviewed, you should do so and then have a talk with your agent about the importance of long term care insurance. You'll be glad you did.

Judi Seay of FL 12:43PM April 06, 2010

Jc is correct. I have advised a number of folks exactly the same. In our 50's, we already have those instruments written such as an estate plan, trusts, and an ILIT (for when the taxman starts coming after estates again). Don't forget health care directives. As to planning, he is clearly correct, assume the worst and hope for the best. Our combined retirement income will be almost twice the amount of our average monthly expenses and still pay the health insurance premiums, leaving our retirement savings untouched for catastrophic events. For a $600k nest egg and assuming you will don't need to touch the principal, just a 3.5% return will pay out the 20k per year to pay for annual health costs assuming a 20 year life expectancy at 65. Don't forget one last thing, the IRS does tax social security when you reach a certain income level (it's already means tested) and your pension is probably taxable as well

tom of ND 11:49PM March 15, 2010

The comments that I have read so far collectively show the whole picture. The article is not to be an exact representation of your circumstance. For example, location, degree of specialist medical attention and availability to medical professionals (traveling hundreds or thousands of miles away- food, lodging, car rentals, flights, insurance, etc) are not inclusive of these numbers.
Don't get lost in the "for instance" because you certainly pick it apart 40 ways to Sunday. Focus on the message. The message is that of awareness to the very real possibility of financial commitments in the future which are health care related. This message can mean many things, but to younger folk, the might want to focus on keeping themselves in better shape and eating properly. For middle age folk, they may want to start contributing more to the retirement accounts and spending less. For the near retirement folk, start considering a strategy to cope with such circumstances and have those "difficult" decisions like estate plans, long term care insurance, life insurance etc.
I am an advisor and do this with clients on a daily occurrence. Not every client has the same circumstances, but every client will have the same concerns- "Will we get through this if it happens to us?"
Sit with your advisors and put a strategy together. Sit with your spouse/partner and think of all the "what if" scenarios. No matter how crazy they seem, include them. Take pensions/retirement income and cut them by two thirds and then run the numbers. See where you would be at then and work from there.

JCAdvisor of NV 7:48PM March 15, 2010

This article is typical of general financial journalism in that it does not declare whether future cash flows are real (inflation adjusted / constant dollars) or nominal. Only the final study quoted in the final paragraph is explicit (costs are real). It's not at all clear whether the other study results are nominal or real. This is an essential distinction.
Other than that, "heyjoe" is right, it is a difficult decision to save. We are natural savers, but are having serious discussions about spending all of our income enjoying life now and only having a small nest egg going into retirement. The government is only going to keep adding "means testing" to benefits, so we think our savings may actually be "taxed" away in retirement through a reduction in benefits. We are very much on our way to "to each according to his need".

tew of CA 6:25PM March 15, 2010

A good addition to the article would have been how long the 65 year olds are expected to live. Furthermore, if we knew that number (let's assume 20 years), the number breaks down to < $10k per year. Given our own family medical and longevity histories, and currently approaching 60, I will live only to my mid 70's and drop dead of a sudden heart attack. My wife will live into her 80's or so and die quickly as well. In between, nothing in our family backgrounds or our current health, which is excellent, indicates any lingering diseases, chronic conditions or any medication costs. For our respective parents who have all passed away in the last 9 years, total medical costs during their retirement were much less than the $197,000 cited. I suspect many will use or pay much more than 197,000 in retirement, but we will be weighing down the other end of the curve.

tom of 1:05PM March 15, 2010

I used to think saving throughout ones life was to have a nice retirement and travel. Now I'm reading the funds we have saved will be spent on healthcare. We pinched pennies all our lives and this is what we get? It looks as though my friends, who spent all of their money in the moment and never saved, will be the benefactor of free healthcare through the government, albeit medecaid. There is no reward for doing the right thing. I wouldn't be surprised if they cut back my Social Security because we have saved 300k and have a little nest egg. There is something terribly wrong with this.

heyjoe of WA 11:36AM March 15, 2010

Every quoted fact in the article is true. However there are two very significant costs which musy be included.
- We older folk very often need much more of things that others don't, especially if disabled: paper towels, more expensive softer meals, many more OTC drugs for ailments that are not even considered "medical expenses" and not allowable for tax deductions.
- When still working we saved for retirement when the dollar was worth 80 cents
Now the saved dollar is only worth 20 cents due to INFLATION. Factor in that five times inflation and retirement means a huge life-style DEFLATION.
Taxes of all kinds have incresed, often due to 'increase' of home and property values. That represents yet another decrease in the quality of life for us older folk.Has it ever been worth even considering retirement ???

VANowicki,MD of CT 11:55AM March 09, 2010

We have $600,000 in our nest egg, plus about $250,000 in our home
(owned outright), and yet it would seem that we are still hanging
out to dry. Seems like anything less than $1-2 million won't do
the trick.

Dixidude of VA 8:23PM March 08, 2010