Retirees Face Substantial Income EroSION From Healthcare Costs: Social Security Trust Fund Expected to Deplete in 2033

Retirees in the U.S. face significant income erosion from healthcare spending, with 88% of total retirement income and 71% of Social Security benefits remaining after out-of-pocket (OOP) medical costs. The Center for Retirement Research at Boston College found that OOP medical costs include premiums, doctor visits, and prescription drugs. The Social Security trust fund is projected to be depleted by 2033, with benefits likely to be 77% of expected levels after depletion. Both Original Medicare and Medicare Advantage policyholders spent similar portions of their income on medical expenses, leaving 87% and 88% of retirement income, respectively, after OOP health care spending. Enrollment decisions should consider provider networks and potential premiums. High-deductible health plans can support Health Savings Accounts (HSAs), which offer tax-deductible, tax-free growth, and tax-free withdrawals for qualified medical expenses, including Medicare premiums in retirement.