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Retirement and Healthcare Costs

Healthcare Expenses Can Cramp Retirement Plans

When we think about retirement, we often have visions of traveling, spending more time with family and maybe even picking up a new hobby.  We do not want to cloud those rosy visions with planning for potential medical needs, but the reality is that considering these issues will be a big portion of successful retirement planning. 

As much as you prepare, it is difficult to map out every expense.  The chief financial concern for Americans when planning retirement is the cost of healthcare.  These unexpected expenses can really crimp the fun part of your retirement plans if they are not accounted for and most people planning retirement grossly underestimate what typical out-of-pocket costs for healthcare during retirement will be.  How do you estimate your potential medical expenses? 

Here is a quick checklist to help you get started:
  • Consider your current medical condition. What you should budget for health care greatly depends on your age and overall health.  If you have an issue that will remain with you as you age, you will need to do the research on medications, potential procedures, and the costs associated with them.
  • If you are still working, talk with your current insurance provider about ways to use your health savings account (HSA) as a potential means to pay for certain medical premiums including Medicare and long-term care insurance.
  • Research what Medicare plans are available along with any supplemental policies that you may need. Medicare can pay for some healthcare spending in retirement, but with limitations.  You should always consider working with an advisor to determine what those potential costs will be. 
  • Consider opening a savings account specifically for medical expenses.
  • If you think you may need a caregiver to handle every-day activities, you will need to investigate long-term care insurance as well.  
  • Review potential Social Security options with an advisor.
  • Last, as retirement grows closer, look at what you have planned and determine if anything has changed so you may alter your financial course accordingly.
Here are a few things that can create obstacles in stress-free retirement:
  • Waiting too long to begin saving – While ‘better late than never’ is certainly true, it goes without saying that the earlier you begin saving, the more cushion you will have.
  • Withdrawing money from your retirement fund – We know that emergencies happen. If there is any way you can pretend that retirement fund is not there and handle those emergencies in an alternative way, your retired self will thank you.

At the end of the day, as you are planning your retirement, you must consider that healthcare spending could take a big cut of your retirement budget.  The better you prepare for it, the more successful you will be in enjoying those years!

Feel free to contact us with any questions. We are here to help.

*Gilliam Insurance Advisor is not approved by, endorsed by, or affiliated with a government agency. 

*Image by Thomas Breher from Pixabay 

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