Retirement planning involves making projections regarding your anticipated expenses, and to do this intelligently you have to understand what your health care costs are likely to be during the latter stages of your life. Of course this is an imperfect science on a number of different levels. For one, you have no way of knowing exactly how well your health will hold up and what type of medical challenges you may or may not face. And for another, there are factors that are out of your control such as the cost of health care and how much you will have to pay out-of-pocket to supplement Medicare once you become eligible.
For this reason it is important to keep an eye on the state of the Medicare system. At the present time there is a bipartisan congressional “super committee” convening in an effort to trim down the national debt by $1.5 trillion over the next 10 years. They’re supposed to come up with a plan for doing this by November 23rd, with the proposals that they present being voted on by December 23rd of this year.
Cuts to Medicare are one of the things that are being considered by this super committee. According to the Congressional Budget Office outlays for Medicare and Medicaid comprise 23% of all federal spending. This is quite a large chunk of course, but it should be noted that 10,000 people are applying for Medicare every day and this volume is expected to continue for the next 20 years. So, there will be more and more people enrolling in the Medicare program over the next couple of decades.
There are a number of different things that the super committee could do with regard to Medicare, including raising part B premiums, instituting a private voucher system, extending the age at which one can apply for Medicare (it is currently 65), and/or requiring high income retirees to pay more out-of-pocket.
If you are planning for your retirement, this is a matter that you may want to pay close attention to over the next few months. The way that it ultimately plays out can have a significant impact on your long-term budget and it could even affect when you choose to retire.