Manage Health Care Costs
As life expectancies increase and people spend more years in retirement, money set aside to pay for health care will have to last longer as well. Factoring in health care expenses has become a critical part of retirement planning.
Steps you can take to help manage your health care cost should help to ease your mind and budget when you arrive at retirement:
1. Understand your health insurance options – You need to understand what your options for health coverage are: what you need, where you can get it, the cost for that coverage, what Medicare covers, and understanding how to plan if you plan to retire early.
2. Factor health care costs in your income planning – you will want to anticipate medical costs as part of your larger income planning goal because that is such an important and essential expense in retirement. Planning and budgeting to purchase long term care (LTC) insurance should be included in your budget. The $230,000 amount discussed earlier DOES NOT include long-term custodial care or nursing home expenses. Medicare provides skilled nursing care NOT custodial care (activities of daily living).
3. Take advantage of all possible funding sources – Take advantage of Health Savings Accounts (HSA) at work or think about part time employment to keep the benefits.
4. Be a smart health care consumer – Being informed and proactive about choosing health care providers and managing your care may be the most effective way to control costs in retirement. For example, someone who breaks their arm could spend $2,000 or more and hours of their time in the emergency room while an urgent care facility might cost $300 for the same care.
Be sure to ask questions to get a clear description of any diagnosis and plan of care in understandable language. Know what you’re paying for, what are the charges, fees, and out of pocket costs you should expect for the treatment plan.
Another research finding revealed health care costs vary widely by geographical regions
Planning for health care expenses in retirement is extremely important and helps to address one of the five key risks to destroying your retirement. Planning ahead of time with a qualified Certified Financial Planner and carefully considering your needs, expenses, and financial resources will allow you to be in a better position to handle the costs when they arrive.
Don’t delay – get it done. Plan for Prosperity