Have you saved for post-retirement medical aid contributions?

Growing Old is not for the Fainthearted…

 

Old age is typically characterised by an increase in health care needs and medical aid expenses. The employer’s contribution seizes at retirement and it then becomes the responsibility of the pensioner. Without planning and saving for your medical aid expenses, living through your golden years in comfort whilst also covering your medical expenses may result in a burden too large to carry yourself. Prevent your deteriorating health from wiping out your nest egg by saving for your medical aid expenses and allowing increases in your contributions of 10-15% per annum. With an increase of 15% in contributions, your medical aid contributions will double after every 5 years.

 

Unfortunately no pension fund will pay increases of 15%, thus your medical aid contribution will be a bigger portion of your income every year. There are many expenses that one can downscale in retirement for example clothing, travel and housing, but unfortunately medical aid contributions and expenses is not one of them. Consequently, it is important to make certain that you plan for your most important and probably biggest post-retirement expense.

 

Over the last few years, the average increase in medical aid contributions, have exceeded inflation by 3% to 5% per year, with the average monthly contribution for an adult member falling between R3000 and R5000 per year. The table below gives insight on how much you will need at retirement (age 55, 60, 65) as a male or female to cover a R5000 monthly medical aid premium.

A couple consisting of a male aged 60 and a female aged 55, will need between R3.5m and R4.5m to cover their life-long medical aid premiums, assuming a monthly medical contribution of R5000. This is more than the average monthly lump sum saved for retirement and a very big concern for many pensioners.

 

“Growing old is not an option. We don’t have a choice. But we do have choices that will greatly affect our quality of life for the rest of our life.”

 

ENDS

 

 

 

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