During your retirement years, you will have to spend a lot of money on healthcare costs. While this is true, there are still many older Americans who aren’t planning for this time properly.
A healthy couple retiring at the age of 65 can expect to spend around $285K on healthcare costs during retirement. This estimate assumes the couple will be eligible for Medicare benefits and includes copays, premiums, and other related expenses, and prescriptions.
Approximately 66% of retirees admitted that handling health concerns was one of their top worries for retirement. While many assume that Medicare is going to cover these costs, this isn’t always what happens.
Medicare doesn’t cover all expenses. This includes over the counter medications, basic vision, and dental coverage, which means these costs would be tacked on top of the $285K mentioned above. It also excludes the cost of long-term care if it is needed. While thinking about covering medical-related expenses during retirement can become overwhelming, there are some steps you can take to reduce your costs. Keep reading to learn what these steps are.
Review Your Plan
There are many Medicare plans to choose from. Each one offers different levels and types of coverage. For example, if you have Medicare Parts A or B, you can go to any doctor who accepts Medicare. However, when you opt for a Medicare Advantage plan, it may be more affordable if you go to hospitals and doctors that are considered in-network.
You can also take time to find the best Medicare Supplement plan, which offers additional benefits. It is a good idea to regularly review your plan and benefits to ensure it is still the best option for your current state of health and needs.
Consider Funding a Health Savings Account
It is possible to get ahead of your health-care expenses by investing money into a health savings account, which is tax-free, before enrolling in Medicare. As mentioned, the money you contribute is tax-deductible, but the withdrawals and earnings aren’t taxed if they are for health-related expenses.
After your Medicare coverage starts, you can’t contribute to your HAS; however, you can use the funds to cover your medical costs that are not covered by the plan, includes your out-of-pocket expenses and copays.
Take Control and Manage Your Retirement Income
Usually, the more you make, the higher your premiums will be for Medicare Parts B and D. After you have reached retirement age, make sure to manage your distributions from all sources of tax-deferred and Roth accounts in a manner that helps you stay in the lowest tax bracket you can. Utilize the accounts allowing tax-free withdrawals first, like your Roth accounts and your brokerage accounts. These are only taxable if you sell an appreciated asset to distribute case.
Any distributions from an HAS account, Roth IRA account, and your cash value life insurance policies are not considered in the formula that determines the premiums you pay for Medicare Part B.
Think About Buying Long-Term Care Insurance
Do you want to make sure you have the funds needed to cover at-home care, nursing home care, or assisted living care?
If so, buying long-term care insurance coverage is a smart move.
With this policy, you can cover the costs of care for between two and five years, sometimes longer. While insurance premiums are going up, many financial advisors still recommend making this investment.
You may also want to consider medicare insurance which the government provides for anyone above the age of 65 years. Once you enroll for Medicare, you will need to decide on the type of coverage you want, either original medicare or medicare advantage.Â
This type of insurance has a set of benefits ranging from hospitalization and doctor’s visit to hearing and hospital care, and so much more. You do not want to experience any health payment issues in your older years, especially if your finances are not secured. Therefore, it would be best to consider some of the best solutions to ensure you get good medical coverage.Â
Any care insurance will ensure you get good medical attention when need be. Besides, this can also contribute to good mental health when you don’t have to worry about paying for your health expenses. Therefore, ensure you do your research well and identify which long-term care insurance will meet your needs.Â
Are You Ready for Retirement?
As you can see, there are several steps you can take if you want to ensure you can cover your healthcare costs during retirement. Along with ensuring you are covered, some of these tips can help you save money, too.Â
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