According to Fidelity’s most recent study on health care in retirement, 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 a proactive, informed patient.
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.
Review your Medicare options.
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.
Use a health savings account (HSA) to fund your out-of-pocket costs.
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 DSM Financial. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
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Are you a millennial with nothing saved for retirement? You’re not alone. According to a new report from the National Institute on Retirement Security, two-thirds of people between the ages of 21 and 32 have nothing saved for retirement.1
Of course, you may not think that retirement should be a big priority for you right now. After all, if you’re in your 20s, you may have more than 40 years left until you retire. You also may be dealing with more pressing financial issues, such as student loan payments or credit card debt.
While it may seem like retirement is too far out on the horizon to worry about today, now may be the right time for you to start saving for your retirement. Below are three reasons why it pays to start your savings plan in your 20s. A financial professional can help you develop and implement a savings plan.
Do you have a retirement strategy? For many people, retirement planning consists of contributing to their 401(k) plan or IRA every year. When you’re young and have many years until retirement, your strategy should focus on savings and asset accumulation.
As you get closer to retirement, however, you may want to think about more than just the dollars and cents of retirement. It’s important to save assets, but it’s also important to consider how those assets will be used when you leave the working world. That means planning your lifestyle and your activities during retirement.
Below are four questions you may want to ask yourself as you develop your retirement strategy. These questions can help you think beyond the financial aspect of retirement and focus on lifestyle, relationships and even your health. That could inform your decision-making as you approach retirement.
Worried that you won’t have enough money for retirement? If so, you’re not alone. According to a recent study from Gallup, retirement is a major worry for many Americans. The study found that 54 percent of respondents were worried that they won’t have enough money to fund their retirement.1
There could be good reason for concern. A study from the Economic Policy Institute found that the average American adult has less than $100,000 saved for retirement.2 While that’s a sizable sum, it’s far short of the amount many retirees need to live comfortably.
The good news is that it’s never too late to correct course and boost your savings. By making a few changes to your savings strategy, you could significantly improve your odds of funding your ideal retirement. Below are three tips to help you increase and protect your retirement savings:
According to a recent study, Americans hold nearly $2.5 trillion in individual retirement accounts (IRAs), making the IRA one of the most commonly used retirement savings vehicles. Those nearing retirement, between the ages of 60 and 64, have an average of $165,139 in their IRA.1 If you’re like most Americans, your IRA will be a significant income source in retirement.
IRAs are popular vehicles largely because of their favorable tax treatment. In traditional IRAs and other types, such as the SEP and SIMPLE, you can deduct your contributions. All IRAs also offer tax-deferred growth. That means you don’t pay taxes on your gains as long as the funds stay inside the account.