High medical costs are putting pressure on retirees

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High Medical Costs Are Pressuring Retirees

Saving for a comfortable retirement is a big undertaking. But saving for the eventualities of what an advanced age may bring with it is a whole different pair of shoes.

Increasingly, older Americans are facing financial difficulty after encountering high medical costs.

Bills, Bills, Bills

Any health crisis that requires lengthy and often expensive treatments, such as cancer, can throw households into financial disarray. In retirement, when most people live on a fixed income drawn from their retirement funds, the damage can be even greater.

Two in five Americans deplete their life savings within two years of a cancer diagnosis, while survivors are nearly three times as likely to file bankruptcy, according to estimates from the American Cancer Society (ACS) cited by Business Insider.

These sky-high costs force some older Americans to return to work in retirement.

Cushioning the Blow

Given their costly and often unexpected nature, medical emergencies pose a serious risk to aging Americans’ financial stability. 

Medicare has helped cushion the blow for many retirees, but it may not be a complete solution, due to high out-of-pocket costs. In 2022, U.S. households with Medicare spent $7,000 on medical bills, per a Kaiser Family Foundation report.

All this stresses that the need for an emergency fund remains in retirement as it does during working life. There are also specific types of insurance that can help with expenses later in life, such as long-term care insurance, which may pay for health aids or a nursing home down the line. Being prepared is key.

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