Will Healthcare Deplete Your Social Security Benefits?

Posted on October 1, 2015

Payroll servicesIt has been said before that there are two groups of people who know all too well what healthcare can truly cost a single individual over the course of their life – providers of payroll services, (who get to manage the monies coming out of each paycheck to pay for health insurance, etc), and senior citizens who far too often find themselves in the scary situation of finding huge chunks of their hard-earned savings evaporating just to cover insurance and medical bills. It only gets worse as they get older, as well. We currently fall into the former category, being a payroll company that handles payroll in MA as well as other parts of New England, but since we are all steadily getting older, and healthcare costs are steadily getting higher, we would like to take this moment to address the very real hazard healthcare has come to pose to those on fixed incomes – Social Security in particular.

The days of Social Security being a source of supplemental income for retirees seem to be drawing to an end. Increasingly, we are seeing higher and higher percentages of Social Security incomes being used to pay for healthcare expenses and insurance – things we have been accustomed to thinking would be handled by Medicare. Unfortunately, the costs of healthcare and insurance have gotten so high, and continue to grow, to where increasingly large percentages of social security benefits are simply going to pay for healthcare. In fact, a recent study published just this year deduced that a couple eligible for full retirement benefits this year can expect to see approximately 67% of their lifetime Social Security benefits swallowed by the healthcare black hole.

Add in the fact that the predicted inflation rate for healthcare costs currently stands at 6.5%, and the picture becomes even more grim. The same study mentioned earlier that for the rest of the next decade, it is estimated that retirees can expect to see average healthcare costs of up to $11,000 – a number expected to grow to over $31,000, accounting for inflation, in just 20 years. The numbers truly tell a terrifying story – one in which many seniors may find all their dreams of “seeing the USA in their Chevrolet” smashed to pieces simply by the costs of paying for their healthcare.

All is not lost, however. It would seem that the best way to prevent the above scenario would be to have substantial retirement savings in place prior to retirement in order to help stave off the impact of healthcare expenses and still have enough money left over to live comfortably and on their own terms – as we would love to see all retirees do. The future sure doesn’t look bright and cheery at the moment – but all that means is that we all have to put a little more effort, and savings, into our retirement plans in order to help ensure that they all come to fruition.

If you have any questions about the above, or would like to talk to a local payroll company who you can trust to do the job right, please don’t hesitate to call us at 978-251-3003 today!