Where you retire could make a big difference in your health care costs

Baby boomers have different retirement dreams than their parents had. They’re looking for dynamic downtowns, culture and arts, and opportunities to explore nature and practice active lifestyles in top-quality sports facilities.

One item they may want to add to their must-have lists: quality health care at an affordable cost.

Most people underestimate the potential burden of health care costs during retirement years. But where you choose to retire can have a big impact on how far your health care dollars will go. Differences from state to state can be significant.Cara Sjodin

Let’s use as an example a 52-year-old woman who plans to retire at 65. She has high blood pressure and she’s overweight at a height of 5 feet, 5 inches, weighing 200 pounds. Let’s assume she lives until age 85. Now, look at the table below to see:

  • What she can expect to pay for her health care in five different states,
  • What Medicare can be expected to cover, and
  • What the “gap” is – or what she will have to pay out of pocket or arrange for pay through a Medicare supplemental plan.

Florida

New York

Arizona

South Carolina

Montana

Total health care costs       $279,112

$257,490

$255,652

$238,404

$200,728

Covered by Medicare

$185,748

$169,530

$168,151

$155,218

$126,957

Gap

$93,364

$87,960

$87,501

$83,186

$73,771

As you can see, there’s almost an $80,000 difference in today health care costs between Florida and Montana and a difference in almost $20,000 in out-of-pocket costs.

These calculations come from the Optum Health Savings Checkup. The estimates come from an algorithm that is based on $136 billion in real-life claims and payment experience.

You can take a Health Savings Checkup to get an estimate of your own estimated retirement health care expenses. Unlike many calculators that generalize costs, the Health Savings Checkup lets you privately and securely enter information about your own health status and your retirement savings.

You’ll see if you can expect to have a gap in savings to pay for health care. And maybe ask a few more questions before making a down payment on a home in your dream retirement location.


About the Author

Cara Sjodin is Vice President, Health Wealth Advisor Services with Optum Financial Services, a UnitedHealth Group Company. She leads the consumer digital experience work and decision support initiatives to help people plan and save for their health care costs in retirement as well as helping people understand the health care cost impact of their lifestyle choices.  She has 20 years marketing experience in product manufacturing, financial and health care industries.  Prior to joining Optum, she held numerous marketing and field engagement positions with Ameriprise Financial and American Express Financial Advisors.  She began her career at Lifetouch in several product management and marketing positions.  Cara holds a BA degree in Speech/Communications from the University of Minnesota.

3 thoughts on “Where you retire could make a big difference in your health care costs

  1. This is all good advice. Obviously, financial planning is key to a fulfilling retirement. But I want to call to the attention of baby boomers and anyone planning retirement or recently retired that emotional planning is important too. Going from a full time job to no job may seem ideal, but it is an enormous and difficult adjustment. Too many retired people end up feeling useless, with no purpose. Many suffer from episodic depression as a result, making what could be the best time of their lives, the worst time. Prepare yourself by finding a passion to pursue during retirement.

    Boyd Lemon-Author of “Retirement: A Memoir and Guide” (December 1, 2012); Eat, Walk, Write: An American Senior’s Year of Adventure in Paris and Tuscany (2011); and 5 other books. Information, reviews and excerpts: http://www.BoydLemon-Writer.com.

  2. “Differences from state to state can be significant” this is true but when considering retirement one may also want to consider some overseas locations where healthcare costs can be significantly lower. I recently came across retirementandgoodliving.com. The site lists top retirement locations in the US and overseas as well as information on health, travel, finance, etc. Worth checking out.

  3. Its amazing post. I enjoyed reading your articles. This is truly a great read for me. I have bookmarked it and I am looking forward to reading new articles. keep posting such an interesting things

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