How to Stay on Top of Healthcare Costs During Retirement
It can be hard to stay on top of healthcare costs during retirement. Adequate retirement planning paves the way to a peaceful financial future during the golden years.
Learning how to stay on top of healthcare costs during retirement will help beneficiaries avoid financial distress or hardships.
How to Stay on Top of Healthcare Costs During Retirement
One of the largest expenses for Americans in retirement today is the cost of healthcare.
Unlike generations before, younger age groups won’t have the same access to employer retiree health benefits in the future.
Preparing for the future may include changing the way you use the health care system.
Rising Healthcare Costs for Retirees
The costs of health care can consume a beneficiaries’ budget for retirement. Many factors are driving the rise of retirement health care costs.
For starters, people are living longer than in the past. This is causing health care needs to increase, for a longer time. Additionally, the average age for retirement in America is currently 62.
Meaning, on average, people are retiring 3 years before Medicare eligibility begins (65 years old). The assumption that Medicare covers all health care expenses in retirement ages results in retirement cost gaps for many.
In fact, the estimate of about 15% of retiring member’s average annual expenses towards health-care related costs. Medicare costs include premiums and out-of-pocket costs.
The average health care costs throughout retirement are rising and continue in years to come.
While it may be true that the cost of health care is expensive, reducing spending each year is possible.
Developing a Retirement Withdrawal Strategy
Creating a strategy for retirement saving is one-way clients can stay on top of healthcare costs. Current spending and future spending amounts are unavoidable.
Additionally, clients have no way to tell how long their funds are going to last in retirement. Trying to predict a health condition later in life, is outrageous and unrealistic.
Instead, save enough for retirement years by staying on a fixed income. As early as possible, begin setting aside a specific amount from each paycheck for retirement planning.
Choose a strategy that works, make sure you can afford to live in the meantime. However, the key to having a successful retirement fund is to remain consistent with the strategy.
Sign Up for a My Social Security Account
The Social Security Administration offers personalized statements when clients sign up for a My Social Security Account. Statements include information warning clients about any potential risks when making retirement decisions.
For instance, if a client files before the age of 62 they risk potentially receiving lower benefits. Full retirement benefits and amounts are at risk for a reduction in about 16 years.
Consider Medicare When Turning 65
Approaching the 65th birthday means more time spent looking at Medicare options for healthcare coverage. Medicare eligibility happens for most when they turn 65.
Enrolling during the 7-month window known as the Initial Enrollment Period is the best time beneficiaries can sign up. This window starts 3 months before the month of your 65th birthday, the month of, and ends 3 months after.
Medicare Coverage During Retirement
Coverage includes multiple parts, each part offering different coverage and benefits. Part A and B make up Original Medicare.
Medicare Part C plans are all-inclusive offering extra services Original Medicare doesn’t cover. Part C or Medicare Advantage plans include prescription drug coverage.
Beneficiaries may choose to enroll in Medigap or Supplement policies to help cover expenses like deductibles, copayments, and coinsurances in addition to Original Medicare coverage.
Unfortunately, many are under the impression that Medicare eligibility means no more out-of-pocket expenses. However, Medicare is full of out of pocket costs.
Medicare has many options to consider, individual health needs to determine what plan or plans may be right. Talk with a Medicare agent to help compare different plan options.
The cost of long-term care can be as high as $6,000 a month. Costs vary depending on the type or level of care and the location.
As long-term care is so expensive, planning for these costs can save you from drowning in medical bills. Informing family members of preference for care helps smooth the process over.
You may prefer or need an in-home, assisted living or continuing care. Try finding a facility in advance, sometimes special rates are available.
Including all possibilities for a long-term plan is a key factor for planning health care in retirement. Using a financial advisor may be able to get an estimate to plan accordingly.
Health Savings Accounts
Save taxable income by using Health Savings Accounts (HSA) and Flexible Spending Accounts (FSA). Seniors with a qualifying high-deductible health plan may open an HSA to prepare for retirement healthcare costs.
A few ways these savings accounts can help include, contributing to a Health Savings Account tax-free and use the money for medical costs.
Any funds unused roll over every year. Any surplus costs can be invested, giving you more opportunities to save for the golden years.
Once you turn 65, take funds out and then only pay income taxes. Like an IRA; or continue using the money for tax-free medical expenses.
Stay on Top of Healthcare Costs During Retirement
Medicare health insurance plans offer a range of coverage options. However, Medicare doesn’t cover everything.
Planning for potential health care costs is of the most important for maintaining healthcare costs during retirement.
Either by yourself with the assistance of a financial advisor, don’t wait until it’s too late to think about retirement. The sooner you start planning, the easier the process.
The number of potential health issues later in life are endless. Plan for all possibilities and secure a plan for any future healthcare expenses.
To better stay on top of healthcare costs during retirement call the number above to speak with an agent. If you can’t talk, fill out a rate comparison form to see the best coverage options.