Displaying items by tag: social security

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.

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.

There are a record number of people with over a million in the 401(k) accounts which means even more people are considering retirement in the upcoming year. However, there are lots of factors that investors need to consider before even thinking about early retirement. Many consider a $1 million nest egg enough however the 25x rule (retirement is 25 times your annual expenses) might not go far enough. Rising healthcare costs are eating away at existing retirement accounts, and many fail to accurately gauge their retirement healthcare costs. Additionally, rising inflation is eating away at the paper wealth and needs to be a factor in. If you are planning on retiring early you will need a series of tax loopholes to do so without paying high penalties. Finally, an early retirement needs to rebalance their portfolio to a less risky strategy sooner which may leave you with less than you were projecting.

FINSUM: Meet with an accountant or your financial advisors so you can fully gauge how expensive an early retirement could actually cost.

Most all Americans rely on medicare during their retirement as a means of subsidizing or paying for their healthcare. This year is more critical than ever as changes hit medicare payments because the U.S. is seeing a spike in inflation that eats at retirement funds and might put many in a bind. Medicare costs are split into two main categories: Part A, hospital coverage and Part B, outpatient care. Most don’t pay for a Part A premium and for those that don’t meet the work requirements costs aren’t changing much about $28 for the year, but Part B is a different story. For the lowest income category, the payment is up to $21 a month, and that only increases as tax returns increases. Individuals should appeal their part B premium if their income had a significant change.

FINSUM: These healthcare cost changes are huge, and retirees need to address them in their portfolio given spiking prolonged inflation.

Millions of Americans are reliant on the social security payments as they shift into retirement, and while SSA boosted the amount in checks by 5.9% it pales in comparison to the record CPI numbers. The CPI climbed at a jaw-dropping 6.8% in November, which skims a healthy amount from the bottom line. Another large factor eating at people’s retirement social security is Medicare Part B premiums and are cost-of-living reducer. Medicare Part B premiums will subtract 29% percentage points from the Social security Take home over the next 30-years. Finally, retirees should be wary that their prescriptions are covered by Medicare because otherwise, they will be a hefty retirement expense.

FINSUM: It’s outrageous that social security and other retirement accounts aren’t keeping pace with the actual costs of retirees, and needs to factor into investment decisions.