If you’re anticipating that Social Security benefits are going to help cover most of your expenses as a retiree, you’re in for a big disappointment.
While your retirement income from the Social Security Administration will undoubtedly be helpful in supporting you in your later years, it’s nowhere near enough to provide for everything you need.
In fact, a troubling new report shows it’s possible almost a third of your entire benefits check will be eaten up by one key expense you face as a senior — if you receive close to the average Social Security benefit.
This huge cost can leave you with little left in your Social Security check
According to an AARP report released in December 2021, retirees with traditional Medicare ended up spending an average of $6,168 per year on covering the costs of insurance premiums and medical services.
Considering that the average Social Security benefit in 2022 is just $1,657 per month — or $19,884 per year — a retiree with a typical benefit and average medical expenses could end up spending just over 31% of their entire Social Security check on paying out-of-pocket expenses associated with their medical needs.
This can come as a huge shock to many seniors, especially as many people anticipate that the Medicare insurance the government offers will take care of most of their health needs. It’s also a surprise that can lead to financial devastation if you weren’t prepared to cover this big cost and were counting on Social Security benefits to help you pay other bills.
What can current retirees do to cope with this unpleasant Medicare surprise?
Unfortunately, if you’re already in retirement and are faced with medical expenditures that are higher than you anticipated, you don’t have a lot of great options. It’s too late to go back in time and save more for medical services as a senior.
But that doesn’t mean there’s no way to salvage your retirement. A few key steps you may wish to take include:
Shop around during Medicare open enrollment. There are alternatives to traditional Medicare, such as Medicare Advantage Plans. And you can add a Medigap plan to fill some coverage caps in traditional Medicare. While you may end up raising your premiums by choosing more comprehensive coverage than traditional Medicare offers, you could also lower out-of-pocket costs when you get care during the year with these plans.
See if you’re eligible for Medicaid. It’s possible to get additional medical care coverage from Medicaid if your income and resources are low enough. Medicaid can sometimes cover things Medicare doesn’t and can often help keep out-of-pocket costs down.
Talk to your doctor. Your care provider may be able to help you find cheaper prescriptions or take advantage of services Medicare pays more for. Your doctor can also help you practice good preventative care habits to hopefully stave off serious — and costly — medical issues.
What can future retirees do?
For workers who haven’t retired yet, this shocking data on Medicare costs should be a wake-up call that you need to build healthcare spending into your retirement plans.
You should be investing a dedicated sum to cover these retirement costs — ideally in a health savings account, which provides more tax breaks if you’re saving for medical services.
By preparing for medical costs in advance, you won’t be faced with a financial shock when you start to need costly health services. You can ensure your money lasts throughout your later years, even with big doctor bills.
The $16,728 Social Security bonus most retirees completely overlook
If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $16,728 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after. Simply click here to discover how to learn more about these strategies.
The Motley Fool has a disclosure policy.