When factoring for inflation, anaverage 65-year-old couple's annual expenses at age 85 will be 170percent higher than in their first year of retirement. (Photo:Shutterstock)

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Baby boomers planning to fund retirement can expect annualhealth care costs to inflate at a rate that will outpace generalinflation, and consequently, cost of living increases to SocialSecurity benefits.

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HealthView Services, a provider of health care cost-projectionsoftware to the financial services industry, is projecting retiree health expenses to increase at a 4.22percent rate annually going forward.

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That is down from last year's projection of 5.47 percent.

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The lower inflation forecast is owed largely to reduced spendingon prescription drugs, as providers move more to genericalternatives, according to HealthView's 2018 Health Care Costs Data Report.

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Nonetheless, future retirees can expect substantial Medicarepremium payments, supplemental insurance premiums, and other out ofpocket costs. The average healthy 65-year-old couple retiring thisyear will pay $363,946 in out-of-pocket health care costs over thecourse of retirement.

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When factoring for inflation, that couple's annual expenses atage 85 will be 170 percent higher than in their first year ofretirement.

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If a couple narrowly outlives today's mortality tables by twoyears, they will incur another $37,423 in today's dollars.

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Medicare Part B premiums are expected to rise at an average of4.7 percent annually, and Part D premiums are expected to rise 4.5percent. Supplemental insurance premiums are projected to increase5.65 percent in the foreseeable future, the report says.

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READ MORE:

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Employers could subsidize retiree health coveragethrough exchanges

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2 approaches to incorporating health care inretirement planning

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Top 3 reasons employers should consider retireehealth benefits: infographic

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Nick Thornton

Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.