Many consumer costs go up and down through time. Yet, there are 2 costs that never go down: energy costs and health care costs.
Energy and Health Care
Energy examples include gas, electricity, solar, and oil. Although energy can experience short term decreases, in general it doesn’t go down. And, when it does, it goes back up very quickly.
Health care examples are physicians, hospitals, physical therapy, and prescriptions.
Health care costs are increasingly impacted by 3 trends:
1) Ageing population
2) Less healthy population
3) Medicare costs and how they are paid. Medicare is paid either directly to physician from the program or is paid indirectly by patients or supplemental insurance.
Costs In Retirement
It’s prudent to plan on increased energy costs and increased health care costs. Not just for the near term. But for the rest of your life.
No matter where you are in your life, these 2 costs will go up.
Even if you don’t consume as much in the future as in the past, they are likely to go up in other 2 other forms: premiums and indirect costs.
Premiums
The cost of premiums will likely increase through time as you age, since the older a person gets the more health care they use.
Indirect Costs
Indirect costs are those costs that are passed off through the end cost of other products and services you do consume.
In retirement?
How to address that? There’s no magic solution beyond what you already know: Be aware of this and anticipate it by saving now for your future.
Next Step
Ready to take the next step and work with a fee-only CFP? Reach out to schedule a Discovery Meeting to learn more.