Robert Powell, Special for USA TODAY 11:47 a.m. EST March 2, 2015

Robert Powell(Photo: Josh T. Reynolds, for USA WEEKEND)

Good news: Recurring, predictable out-of-pocket health care expenses remain somewhat stable over the course of retirement.

The bad news: Non-recurring unpredictable expenses such as surgery, hospitalizations, and nursing home care increase with age, tend to be more expensive, and, in the absence of a plan to manage those costs, can wreak havoc on a household's finances, according to research just published by the Employee Benefit Research Institute (EBRI), a nonpartisan research institute based in Washington, D.C.

"Health care is one of the key components of retirement expenses, and is the only part of household expenditures that increases with age," Sudipto Banerjee, a research associate at EBRI and author of the report, said in a release. "While some of these costs are more predictable, others are uncertain, and for many people these expenses spike toward the end of life when resources are slim. To successfully manage your resources in retirement, a good plan may include separate preparations for each."

In its research, EBRI found that average, annual out-of-pocket health care costs for a household between 65-74 years old was $4,383 in 2011, which accounted for 11% of total household expenses. But out-of-pocket health care expenses rise for households ages 85 and above to $6,603 a year, or 19% of total household expenses.

On the go? Listen to Robert Powell's interview with Sudipto Banerjee in the audio player below:

The average annual expenditure for recurring health care expenses doctor visits, dentist visits and usage of prescription drugs among the Medicare eligible population was $1,885. According to EBRI, assuming a 2% rate of inflation and 3% rate of return, a person with a life expectancy of 90 would need $40,798 at age 65 to fund his or her recurring health care expenses. This does not include expenses for any insurance premiums or over-the-counter medications, EBRI noted.

But it's the non-recurring and unexpected health-care costs overnight hospital stays, overnight nursing-home stays, outpatient surgery, home health care and usage of special facilities that must be managed.

Nursing-home stays, for instance, can be very expensive, according to EBRI. For people ages 85 and above, the average and the 90th percentile of nursing-home expenses were $24,185 and $66,600 during a two-year period, respectively.

Originally posted here:

Powell: Taming retiree health care