I sit up and take notice when an anecdote from what’s called “real” life gets confirmation from a detailed study. That’s exactly what happened to me recently. And the picture this paints for retirement and medical expenses as we age isn’t pretty. In fact it’s downright scary.
I’d say many of us are just plain screwed. And the number in that category is going up.
Here’s the anecdote.
I’m standing in line at the local drugstore where I get my prescriptions filled.
There’s only one guy in front of me. He looks old enough to be retired but I’d be surprised to find that he was more than 68.
He’s livid. And trying really hard to keep his temper with the pharmacy assistant because he knows it’s really not this guy’s fault.
“You mean,” he almost yells, “that the copay on my prescription of $200? But it’s a generic!”
“I’m sorry,” the guy behind the counter says. “But that’s what your insurer is telling me.”
I can tell that the customer really wants to tell the insurance company and the drug maker to stick it where the sun don’t shine. But he really calms down enough to realize that he either pays or he doesn’t get the drug that his doctor has told him he needs.
As he’s leaving, he turns to me, and noticing my gray hair and assuming that puts us in solidarity, says, “How much of this to they think we’ll take? They’re just grinding us down and grinding us down until we’ve got nothing in retirement. It makes me want to shoot someone.”
He leaves before we can get into a fruitful comparison of potential targets. But I know how he feels and what he’s talking about. After all the insurance company that covers my drug benefits under Medicare has just told me that it’s raising my premium for 2018.
And now here’s the confirming detailed study.
A new study by the Kaiser Family Foundation found that out-of-pocket healthcare costs for Medicare beneficiaries are likely to take up half of their average Social Security income by 2030. (To ready the full study follow this link: new analysis by the Kaiser Family Foundation .)
The report shows Medicare coverage is already leaving a gap, one that’s especially large if you are in poor health or living on a modest income. In 2013 traditional Medicare recipients were spending at least 20% of their income on out-of-pocket healthcare costs. That rises to 43% for recipients in fair or poor health. And soars to 51% for people with incomes of less than $20,000 a year.
Looking at these numbers, if I were your financial planner, my advice to anyone thinking about retirement would be very simple: Don’t be poor. And stay healthy.
Otherwise, face it: You’re screwed.
And anyone who thinks this is getting better is either nuts, or is not following the debate in Congress about cutting Medicare benefits–or is taking reality-altering drugs. (In the latter case, can you tell me where to get some? And if they are covered by Medicare?)
