Lately, there has been plenty of buzz about the rising cost of health care. Estimated health care expenses for retirees has risen to an average of $275,000 per couple (and can rise up to $565,142 per couple) – and this does not include long-term care expenses. Just one year ago, the average was $260,000. Have you thought about how this could affect your retirement? If you’re not taking into consideration how these rising health care costs might impact your retirement plan, you could be in for a big surprise in your future! And we’re not talking about the kind of surprise that makes you feel warm and fuzzy inside. No matter what stage of life you’re in or how old you are, you should be addressing how health care expenses will affect your future NOW!
Save Specifically for Health Care In a Health Savings Account
One little know but great way to save for medical-related expenses is to open a Health Savings Account (HSA). To qualify, however, you must be enrolled in a high-deductible health plan, which is pretty common these days. HSA accounts are a tax-advantaged medical savings account, which allows accountholders to roll over any funds not spent to the next year, so you never lose what you contributed. At retirement, you can use the HSA for health care or roll the HSA into an IRA and use it for retirement! How cool is that? If you’re enrolled in a high-deductible health insurance plan, consider opening an HSA as soon as possible.
Consider Long-Term Care Insurance
Don’t rely on Medicare to carry you through retirement. Even though Medicare does provide many benefits and can cover a lot of medical expenses in retirement, it certainly does not cover everything. That’s why we highly recommend long-term care insurance to our clients. However, when considering your long-term care insurance options, it’s important that you think specifically about what your long-term care needs might be in order to figure out the best level of coverage. Planning for long-term care now could save you and your loved ones (and caregivers) a lot of grief and stress in the future. The sweet spot to apply is between ages 55-65, so don’t delay as underwriting can be strict. This should definitely be considered a part of your overall retirement plan, especially for women.
Think About Medicare
In the same way it’s important to measure when to begin claiming Social Security benefits and the timing based on your retirement age, you should also be thoughtful about when medical expenses will begin to be more of a factor in your life. Since Medicare doesn’t cover everything, you will need to enroll in a supplemental health insurance plan. Medicare does offer some options for supplemental plans, like Medicare Advantage plans, which could reduce overall costs over time, but these plans are limited in many ways, like geographic area and small provider networks. So that may leave you to enroll in a private health insurance plan, for which the cost can be significant. Think about how it might benefit you to work a few more years and stick with your employer’s health plan. The Medicare open enrollment period is right around the corner, starting October 15th! Click here to find out more about the open enrollment period and how to evaluate the plans.
How Can We Help?
There is a lot to consider when planning for health care costs in retirement, and a lot of decisions to be made as you begin the transition into retirement. You need a strategy! We help clients by taking the burden off their shoulders. It’s hard to estimate health care expenses, which can help you save appropriately – but we are able to do that using our WealthMatch program, which allows us to create scenarios to help you see the big picture. Moreover, we are able jump into the complexities of long-term care insurance and simplify the process and the experience, so that you can find a policy that works for you.
Don’t wait! Time is of the essence. Let us help you develop a strategy to help you bridge the gap. If you’re feeling overwhelmed about your future health care expenses or your retirement plan, call us today!
Barrons, Healthcare Costs are Hurting Retirement Savings, September 21, 2017
Fidelity Investments, Retiree Health Care Costs Continue to Surge, September 6, 2017
Barrons, The Real Cost of Health Care in Retirement, February 4, 2017
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