Face up to age, health
RETIREMENT HEALTHCARE COSTS: ILL HEALTH A REALITY OF AGEING
Your past medical history is no indication of your future expenditure.
While your retirement income is likely to keep pace with inflation, greater than CPI increases in medical costs mean healthcare expenses will consume a bigger portion of your income every year.
Medical aid premium increases outstrip consumer inflation each year 3% to 5%.
There are also late joiner penalties and exclusions, and other medical expenses not covered by medical aid.
As you age, moving onto a more comprehensive medical aid plan with a gap cover benefit is an imperative.
This can have severe implications for post-retirement cashflow at a time when one’s health is generally deteriorating too.
As people grow older, so their ability to see, hear, communicate, walk, remember, concentrate and care for themselves is affected.
In its ‘Profile of older persons in SA’, Statistics SA estimated:
38% of South Africans over 60 use chronic medication;
20% use assistive devices such as spectacles
10% wear hearing aids (costs R5 000 and R60 000) and
5% use wheelchairs (R2 000 to R90 000).
These assistive devices and other aids are expensive and not always covered by medical aid.
Over 50% of people aged 60 plus live in extended households which reinforces the fundamental role that family plays during one’s retirement years, especially as one ages.
The same report shows 11% of over 60s have problems communicating, 45% have difficulty walking or climbing stairs, and 34% have problems remembering or concentrating, making some form of at-home care essential.
Mental illness is a big cost driver in retirement, especially with depression and anxiety.
According to a study by the London-based Institute of Economic Affairs, the likelihood that someone will suffer from clinical depression actually goes up by about 40% after formal retirement.
Dementia is the leading cause of disability and dependency in the elderly – with age being the single biggest risk factor for its development. It’s estimated 20% to 40% of South Africans over 65 have dementia, with the average life expectancy between eight and 12 years.
There are enormous economic and medical costs associated with caring for someone with dementia, which can cost anything between R3 million and R7 million, over the person’s expected life span. Prescribed minimum benefits are only required to cover admission for the initial diagnosis and management of acute psychotic symptoms for one week. Thereafter, cover depends on the benefits of your particular plan option. Most medical schemes don’t provide cover for accommodation and care services associated with dementia.
Most families undertake to care for their family member at home but completely underestimate the enormity of the job.
It’s estimated that in the last five years of life, total healthcare spend for dementia patients is almost 60% greater than the costs associated with death from other diseases, including cancer and heart disease. This doesn’t account for costs incurred in the years before the diagnosis is made.
Thus healthcare costs should be carefully assessed when developing a retirement plan.
20% to 40% over 65 have dementia
Eric Jordaan is at Crue Invest
PLAN AHEAD. It’s wishful thinking to not plan accordingly for the high costs of post-retirement healthcare, because ill-health goes hand-in-hand with ageing, says the author.