Q: What portion of your total household budget do you spend on healthcare costs including Medicare premiums and out of pocket?
A: It turns out to be a lot more than our government’s measurement of inflation accounts for. According to the U.S. Bureau of Labor Statistics, households age 65 and up spend 7% of their budget on healthcare. But according to TSCL’s latest Senior Survey, 60% of survey participants say they spend more than double that amount, spending at least 16% of their income (or more) on healthcare.
Why does it matter? In most years, Medicare premiums and out-of-pocket costs are among the fastest-growing costs in retirement. An inflation measure that does not accurately account for the portion of income spent on healthcare tends to undercount the actual rate of inflation, and shortchange your Social Security COLA!