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How can I estimate my out-of-pocket costs for medical care as I get older? How should I estimate possible nursing home costs? I have long-term care insurance, but my spouse doesn't qualify because of preexisting medical conditions


The questions you’re asking are complex and difficult to answer precisely without more information about your specific situation. Even something as seemingly mundane as where you live can make a big difference in the cost of medical care. A 2009 study by the Social Security Advisory Board found, for instance, that Medicare spent three times as much per enrollee in the most expensive city, Miami, as in the cheapest city, Honolulu. It’s hard to imagine that expenses would vary so much between two places that seem a lot alike – they’re both urban areas, they both have palm trees and nice weather – but that’s the case. I don’t know where you live or, perhaps more important, what condition your wife has, so it would be almost impossible to make even a ballpark estimate of the health-related costs that you’re likely to face.
Here nevertheless are some national figures that might provide a starting point as you try to get a handle on where you stand: The average expenditure on healthcare per person of any age was $8,402 in 2010, according to a report by the Henry J. Kaiser Family Foundation that cited research from various federal agencies. Based on 2009 data, the average expenditure for people over 65, including payments from Medicare and other sources, was $9,744. It’s not clear why that figure isn’t even higher, considering that spending goes up rapidly with age; for example, Americans between 45 and 64 years old spent $5,511 on average. Looking at the uncomfortable facts from a different angle, the Social Security Advisory Board study estimated that the average 65-year-old couple will need between $220,000 and $240,000 to provide an income stream that will cover out-of-pocket healthcare expenses for the rest of their lives. Again, that’s the average couple. You and your wife may need more or less.
Many people do not see healthcare as a financial-planning issue in the same way that retirement is. That’s a mistake, especially given the rate at which medical expenses are rising. If you want to prepare properly for what sounds as though it could be a significant burden for you for years to come, you should consult a financial adviser who can help you develop a saving and investment program to meet these and other needs.
-Conrad de Aenlle