Health Care Costs

One of the biggest retirement risks that you could face includes the likes of high healthcare costs, which you may end up having to cover yourself. It is a good idea to sign up for Medicare. but the services included in the Part B premiums can still end up adding up to a pretty penny.

The likes of co-pays, deductibles, drug costs, and co-insurance can end up adding up to quite a lot, especially if you already have a medical condition that needs constant monitoring when you retire.

A study done in 2022 has shown that a retired couple that ends up choosing the retirement path at the age of 65 will end up needing around $315,000 after tax to be able to cover all the medical bills throughout their retirement life. What’s more, this can end up being an uncalculated retirement risk when you think about the taxable accounts, as you will need to cover the paid taxes that you will have to cover.

In the end, this number is just an estimate, and it may be that you will not need to cover that much money out of pocket when it comes to your retirement. However, there is also a high chance that the retirement risk associated with healthcare costs will only increase in the years to come.

A great way to make sure that you will not be taken by surprise by this retirement risk is to make sure you use a Health Savings Account (HSA), as you will be able to make contributions to it in a tax-deductible way and they will be growing in a tax-deferred way. What’s more, you can always make tax-free withdrawals when it comes to health care expenses.