As you age, medical costs are not an issue of “if” but “when.” Here’s how you can prepare yourself both physically and financially.
After enduring the costs of life in your 20s and 30s—like frequent happy hours, impromptu weekend snowboard trips, and umpteen wedding gifts—your balance sheet may finally feel stable and mature as you enter your fourth decade. But a new and potentially large budget category is only just about to emerge for you: It’s healthcare, and its size goes up, starting now, in direct proportion to age.
As you age, medical costs are not an issue of “if” but “when.” Along with preventative health measures to help mitigate future health risks, you can take financial steps to make sure you have enough money in the bank to pay for healthcare.
Personal Health Spending, by Age Group, 2010
Age
Amount
0 to 18
$3,628
19 to 44
$4,422
45 to 64
$8,370
65 to 84
$15,857
85 and older
$34,783
All ages
$7,097
Source: California Healthcare Foundation
According to Fidelity Investments, a 65-year-old retiring couple needs $220,000 in today’s dollars to cover future medical costs. That doesn’t include the cost of long-term care or any additional costs should you decide—or be forced—to retire before Medicare kicks in. This figure includes deductibles, copays, premiums for optional coverage for doctor visits and prescription drugs, out-of-pocket expenses for prescriptions, hearing aids, eyeglasses, and other common expenses that Medicare doesn’t cover.
Separately, savings targets for women are slightly higher than for men because women live longer. The nonprofit Employee Benefits Research Institute estimates that a woman who wants to feel confident that she has stashed enough money away for healthcare expenses needs $139,000 in the bank, while a man needs $122,000.
Age-Related Healthcare Costs
Up to 40, trouble-free health is usually so commonplace that it is often taken for granted. The next decade will usher in challenges that put youth firmly in the past. Good personal habits are important at any age, but around age 40 is the turning point when a few simple but profoundly affecting behavioral decisions can make a difference over the long term and far fewer medical expenses.
Consumers in their 40s have a choice: Spend moderately and preventively now, or risk a cascade of potentially unnerving medical expenses later. Here are some common health changes that happen in your 40s:
1. Eyes
You have changed your iPhone settings for a larger font—you’re not alone. The gradual loss of the ability to focus on near things,also known as presbyopia, starts at around age 40. It affects more people than not, including millions of people who previously had perfect vision. Any change in vision or eye condition should cue a visit with an optometrist.
Cost if addressed: Vision care and eyeglasses are expensive and frequently left out of insurance policy coverage. An annual eye exam costs between $50 and $125; glasses can cost anywhere from $15 at the drugstore to more than $1,000 for specialty frames and lenses.
Cost if ignored: Diminishing quality of life without proper eyewear. For patients who experience preventable blindness, the price is the number of years of lost income, plus the cost of medical care.
2. Bones
You really need to eat your spinach now. Preventive care, such as getting more calcium and Vitamin D along with exercise has been proven to head off many bone health issues, according to medical journals. This is especially important for women. Osteoporosis, begins in the 40s and accelerates over the next decade for females, says Dr. Davis Liu, a board-certified family physician and author of the Thrifty Patient: Vital Insider Tips for Saving Money and Staying Healthy. Bone damage is cumulative and contributing factors include smoking, heavy alcohol use, low body weight, and deficiencies in calcium and/or vitamin D. Medications may also increase the risk for bone problems, including some arthritis prescriptions.
Cost if addressed: Nutritional supplements can cost between $5 and $15 per month, depending on doctors’ recommendations.
Cost if ignored: Osteoporosis leads to fractures, spinal curvature, and loss of mobility. Indirectly, osteoporosis can lead to early death. Risk increases with age. “Women who have an osteoporosis fracture of the hip have a one in three chance of living beyond the next 12 months, due to complications related to the injury,” Dr. Liu said.
3. Digestion
Your late-night pizza habit can catch up with you, as digestive changes begin to occur at about age 40. Acid reflux or GERD (gastroesophageal reflux disease) occur when the esophagus doesn’t close properly and stomach contents travel back up to the throat. Medications effectively relieve symptoms though not the underlying causes.
Fast food, spicy food, fried food, alcohol, large meals, late meals, and tight clothing are all culprits. Tell your doctor about any medications you take, including over-the-counter or prescription NSAIDs as they are known to cause digestive problems. At night, “elevate the head of the bed six inches or with a wedge, as lying horizontally can exacerbate the discomfort,” Dr. Liu said.
Cost if addressed: Perhaps as much as $200 per month or more, depending on diagnosis, treatment, medication used, and insurance coverage.
Cost if ignored: GERD can lead to esophagitis,erosions, ulcers, difficulty swallowing, or bleeding. GERD can also lead to Barrett’s esophagus (abnormal changes in the lining of the esophagus and also a risk factor for cancer of the esophagus). Depending on degree of affliction, sufferers experience significantly reduced quality of life and are often unable to enjoy meals or get a good night’s sleep.
4. Teeth
You can’t ignore flossing or dentist visits ever again. Many dental problems frequently occur in areas of the mouth that only a professional can reach. So if you haven’t kept up a good regimen as a younger person, dental problems can snowball.
Diseases that can become problematic now include gingivitis, is a mild form of gum disease, and periodontitis, an inflammation around the tooth and occurs when gingivitis is left untreated. Gums pull away from the teeth and leave pockets that fill with bacteria, exacerbating the problem. The combination of the bacteria and the enzymes the body produces to fight it breaks down the teeth and tissue, leading to tooth loss.
Like vision care, dental care is virtually never covered fully by insurance. Many policies do not cover implants at all.
Cost if addressed: A basic dental exam typically costs between $90 and $150, not including cleaning and X-rays.
Cost if ignored: Besides causing bad breath, gum disease leads to tooth and bone loss. Some experts posit that gum disease is a precursor to heart disease. A study in Japan found that cumulative overall health costs for people with periodontal disease were 21% higher than dental costs for people who were free of the problem. To treat gingivitis, localized antibacterial treatment can cost $30 to $80 per area. Removal of gum tissue costs around $500 to $900 per quadrant, and it’s $600 or more for partial dentures. It costs $1,000 to $3,000 per implant, not including crown, bone graft, or any additional service. The cost to treat periodontitis can easily top $10,000.
Embrace Your Age, Minimize Costs
An ounce of prevention is worth a pound of cure, as the saying goes. Paying to stay ahead of typical health issues amounts to a fraction of the bottom line if we neglect ourselves. Exercise, eat healthy food, tend to self-care, and get regular checkups. Accept and adapt. Embrace the maturation. Step into the advancing years equipped with knowledge.
What You Can Do
Communicate: Discuss all health changes with your doctor. Investigate low-cost options first.
Get insurance: Basic health insurance is a necessity, not a luxury. For those who use their hands or bodies to do their job—carpenters, artists, mechanics, landscapers, drivers—and those who are the main or sole breadwinners in the home, disability insurance should be considered. Adding insurance as a line item in the budget can pinch, but the alternative could be worse.
Plan for long-term care: Buying long-term care insurance is usually delayed until age 50, or thereabouts. But the likelihood of eventually needing some kind of paid support is high. Women are more likely than men to need paid care, as are people who live alone. Look at long-term care costs in your state when you calculate your income needs in retirement.
Save for healthcare in an HSA or general investment account: A health savings account that is also a brokerage account or mutual fund is a great option to meet future healthcare costs. You can save up to $3,250 each year ($6,450 per family) plus an extra $1,000 per year if you are age 55 and older. Contribute the maximum if you can, but any amount is better than none at all. If you choose an investment account, make sure to choose a low-cost, index-tracking diversified ETF or mutual fund. You should look for an expense ratio of 0.30% or less.
As always please consult your personal healthcare provider for any questions regarding your own health. This article should not be construed as medical advice.
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The Truth About HSAs and Investing
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