By Wendy Waugaman, CEO & President, American Equity Investment Life Holding Company
According to a recent research study from the Insured Retirement Institute (IRI), rising medical expenses, projected to be in the hundreds of thousands of dollars for retirees over their lifetimes—including premiums and out-of-pocket costs—bring another uncertain element to retirement income planning. This is compounded by the Social Security cost-of-living adjustment (COLA) that has not kept pace with today’s health care costs and increases in Medicare Part B premiums which are deducted from Social Security checks.
The good news is that several strategies may be implemented to save for retiree health expenses, and those that involve insured retirement solutions can help mitigate future costs. In fact, the IRI study found that using an annuity, in conjunction with a low-risk side investment, to fund future medical expenses can reduce the investment required in a low-risk investment alone. For example, a 55-year-old male can reduce the total investment needed to fund future health expenses by more than 70% by adding an annuity.
For more information on how rising health care costs could impact your retirement savings, click here.