According to a recent Fidelity study, health care could be a major expense for many retirees. The study found that the average 65-year-old couple can expect to spend nearly $280,000 on out-of-pocket health care costs in retirement.1 Think that estimate sounds high? Consider that you will likely have to pay for things like premiums, copays, deductibles and more.
Many retirees assume that Medicare will pay for most or all of their health care costs. However, that’s usually not the case. Your Medicare coverage depends on your specific options. The more robust your coverage, the higher your premiums are likely to be. And some treatments, such as long-term care and rehabilitation, aren’t covered by Medicare at all.
If you haven’t planned for your health care needs in retirement, now may be the time to do so. Fortunately, there are steps you can take to minimize your risk exposure and perhaps reduce your out-of-pocket costs. Below are a few tips to help you get started:
Be proactive about your health.
They say prevention is the best medicine, and that’s certainly true in retirement. If you’re approaching retirement, now may be a good time to consult with your physician about your current health and what you can do to minimize risk. For instance, perhaps you could improve your diet or exercise routine. Maybe you should undergo that long-delayed procedure now so you won’t have to deal with it in retirement. Think about what you can do to improve your health.
You can also be more proactive when it comes to treatments and services. Once you’re on Medicare, don’t be afraid to ask which tests and procedures are necessary and how they relate to your symptoms. After all, you’ll likely have to pay at least something for much of your care, in the form of either copays or deductibles. Don’t hesitate to ask which services are truly necessary and which aren’t.
Choose the right Medicare coverage for your needs.
Medicare coverage is offered in a variety of different programs known as “parts.” Part A is standard for every retiree and is free. It covers hospitalizations and inpatient services. Part B covers doctor visits and outpatient care. Part D covers prescription drugs.
Part C is an innovative program also known as Medicare Advantage. It allows private insurers to offer coverage that includes traditional Medicare protection but also enhanced coverage. These policies may offer flexibility with deductibles or premiums and often provide protection for services not traditionally covered by Medicare, such as dental visits or eye care.
Take time to choose the Medicare package that best fits your needs. While you can’t predict your future health, you can make an educated decision based on your medical history. If you have a chronic condition or need regular care, robust coverage may be best for you.
Contribute to a health savings account (HSA).
You’ll likely have some level of out-of-pocket medical expenses that you’ll need to fund with your retirement savings. However, you can use a unique tool to save for those costs on a tax-advantaged basis.
An HSA allows you to make tax-deductible contributions and then increase your funds on a tax-deferred basis. If you use the money for qualified health care costs, you can take tax-free distributions. That means you can start saving today to pay for your medical expenses in the future, and you can do so in a tax-favored manner.
Ready to plan your health care strategy? Let’s talk about it. Contact us today at Senior Care Alliance. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.
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Have you put off saving for retirement? You’re not the only one. According to a recent study from the Economic Policy Institute, the average family between the ages of 44 and 49 has only $81,437 saved for retirement. That number is $124,831 for those between ages 50 and 55 and $163,577 between ages 56 and 61.1 While those numbers might represent a good start, it’s fair to say they’re not sufficient to fund a long retirement.
The good news is it’s never too late to get started. You may have to make some adjustments to your plans and vision, but with some discipline and focus, you may still be able to fund an enjoyable retirement.
Below are four tips to help you take fast action and overcome your retirement savings gap. If you haven’t implemented these steps or started your planning, now may be the time to do so. The longer you wait, the more challenging your retirement might be.