With regard to your budget in retirement, healthcare continues to be one of the most important expenses you should consider. As we’ve watched the course of the coronavirus outbreak, we are all reminded that most health conditions impact seniors more significantly than any other group. And, of course, that impacts our finances as well.
In fact, experts estimate that the average retired couple can expect to spend about $285,000 on healthcare throughout their later years. For a single female retiree, this figure is roughly $150,000, and for men the estimate is $135,000.
You might be wondering why those estimates seem so high. Unfortunately, many retirees are surprised to learn that Medicare does not cover all of their healthcare expenses. Aside from Part B premiums, you will be responsible for deductibles, co-pays, prescriptions, and uncovered services such as dental, hearing, and vision.
Consider all of your insurance options. You’re not stuck with basic Medicare, Parts A and B, if the plans don’t suit your needs. You can add optional Part D coverage, for prescription medications, or shop for other supplemental plans such as those for dental care, vision services, and more.
A Medicare Advantage plan rolls Parts A and B together, and often includes Part D coverage as well. Some Advantage plans even provide for dental or vision care. The point is to carefully evaluate all of your health insurance options as you retire, so that you can choose the plan(s) that actually work best for your own budget and healthcare needs.
Save for future healthcare needs now. If you’re eligible for a health savings account, stashing money for current healthcare needs can also help you in the future. All unused funds in the account roll over from one year to the next, all the way into retirement. Plus, you can save pre-tax dollars in the account, which might add up to considerable tax savings each year. You can use this money in retirement to cover Medicare premiums, co-pays, deductibles, and uncovered services or prescriptions.
Inform yourself. Things frequently change on the healthcare front, so don’t approach these decisions as something you “set and forget” for retirement. For example, Medicare and other insurance companies are currently waiving co-pays for coronavirus testing, so that everyone can access the care they need during this important time. Continue to read and evaluate all notices from your health insurance provider so that you’re aware of these opportunities.
Stay in touch with us, too. We will help you plan for your retirement, but afterward we can help you continue to make adjustments to your budget and income. Continue to meet with us regularly during your retirement years, and together we will respond to ongoing concerns and obstacles.