Displaying items by tag: healthcare
Retirees Face Huge Healthcare Inflation
The U.S. is seeing 30-year records on inflation, and whole generations of American’s have never seen inflation this high. Even worse inflation is even more elevated for healthcare services. Healthcare inflation is expected to be nearly 12% for the next two years according to HealthView Services. This could be a huge hole in retirement savings as a couple of retirees today can expect to spend over $85k on healthcare, those retiring in a decade over $160k and those in the next two decades just shy of $260k. Moreover, social security won’t be enough as the cost of living adjustment doesn’t track healthcare inflation or even standard inflation. Meaning healthcare costs will eat away at most of Social Security.
Finsum: HSAs are more valuable than ever given these ridiculous healthcare inflation costs.
Healthcare is Moving into the Home
Covid has forever changed lots of industries but one of the most apparent is healthcare. Incidents for the chronic and specifically geriatric population are growing at an alarming rate and will significantly benefit from an increase in at-home care. The current at-home healthcare market is around $3.2 billion but growing at a 13.4% CAGR by projections will move this to a $7 billion industry over the next 4 years. This isn’t limited to just domestic products an aging population is driving rapid growth across Europe and Asia as well.
FINSUM: It makes sense that healthcare will move more at home. Software and digital products will improve the healthcare many in treatment will have access to inside their own home.
Social Security Badly Underweights Healthcare Costs
Inflation is a concern for retirees, but they should be more concerned than ever becauseSocial Security is tracking the wrong index. Currently Social Security bases its cost of living adjustments on the consumer price index for Urban Wage Earners and Clerical Workers (CPI-W). However, the CPI-W doesn’t fully account for the costs of healthcare and housing that burden retirees more than other groups. Instead social security should track the Consumer Price Index for Elderly (CPI-E) because this is the demographic they are targeting. Research shows that the average social security account since 1983 is in a 0.2% compounded deficit. The rate of inflation for healthcare is slowing which could end up benefiting retirees moving forward but that's just a prediction.
FINSUM: Social security won’t be keeping up with your healthcare costs and investors should augment their portfolios to compensate.
Tax Deductions Could Cut Retirement Healthcare Costs
Investors need to be more active with their finances and taxes as they enter retirement because it's not the time to coast as many presume. One of the areas retirees underestimate the costs of retirement and permanently puncture their safety net is in healthcare. Hefty premiums hit most Americans due to the Affordable Care Act once you hit 50, and most Americans who retire before Medicare will face a shocking bill. There are lots of healthcare tax credits available for those with low and middle incomes, and bigger benefits if healthcare costs breach 7.5% of adjusted income. Finally, Roth conversation ladders will dramatically impact your healthcare costs.
FINSUM: It’s critical to be informed about all of the tax benefits those approaching or entering retirement can take advantage of pre-Medicare.
How Healthcare is Being Transformed by ESG
Healthcare technology is a rapidly changing field that has a plethora of new ideas entering the market daily, but driving that change is impact investing. The Covid-19 pandemic laid bare many of the problems in the healthcare sector and health technology is closing many of those gaps. For example, Zipline used fleets of drones to distribute vaccines to out of reach populations around the globe after securing $250 million in funding. Healthcare is the third-largest portion of impact investing, lagging climate and financial services, but it’s the fastest-growing area. Venture capital in healthcare doubled in 2020 from 2019, and many see this capital as augmenting government and charitable giving to healthcare to improve access and distribution. Breakthroughs in the sector include companies like Han Genix, which uses ultrasound technology to ensure safety procedures are followed by medical workers, or Plethy which syncs sensors and apps to improve post-orthopedic care.
FINSUM: Technology healthcare blends could become one of the best ways to capture growth and industry diversity in your portfolio.