Retirement is supposed to be a time of freedom from decades worth of hard work throughout your career and a point in your life where you feel financially secure. However, over the years we have seen healthcare costs rise dramatically, obscuring the image of a stress free retirement. According to an article by Fidelity, a couple retiring in 2013 is expected to need $220,000 to cover health care costs in retirement. While this is a big chunk of change for anyone to undertake, there are several ways you can manage your health care costs and feel comfortable as you approach retirement.
The first way in which you can manage these healthcare costs is knowing what is available to you in terms of health insurance coverage. You need to know what you need, where you can get it, and the cost of the coverage your looking into. Once you figure out your options you can start to answering these questions.
If you don’t have employer-based insurance, Medicare, a government-based insurance program is a great option to look at. There are four different parts (A,B,C,D) and you automatically qualify for Part A at the age of 65, which is hospital insurance, if you paid Medicare taxes throughout your career. The second part, part B includes outpatient care and is paid by a monthly premium. Lastly, part C and D are supplemental coverage plans that fill in the gaps not covered by A and B and include prescription drug coverage.
A second way in which you can manage your healthcare costs is deciding whether or not your going to be retiring early, or before the age of 65 when you start qualifying for Medicare. If you do retire early some of your options include: Medicaid if you qualify, paying to continue your employer based insurance, or purchasing an individual policy.
Due to the fact healthcare costs are one of the biggest expenses people now face it is a good idea to factor in these expenses into your income planning. According to an article in Fidelity, current retirees are now spending more on health care than they do on food. You can start figuring these numbers in your budget once you know how much the options your looking into cost. Its also a good idea to take into account your current health status and your family’s history of health as this information will help you determine what health issues you may encounter as you get older.
Another great way to counteract these upcoming healthcare costs is by setting up a health savings account or HSA by annually setting money aside for future expenses. These accounts are not subject to the if you don’t use it, you lose it rule making them very accountable. As a result, there are many ways to prepare and be ready for the healthcare costs you are about to encounter.
If you have questions choosing a Medicare plan that offers the coverage you need, contact us at MedicareSolutions at 1-800-328-7305 where a licensed sales agent will immediately assist you.
Citing: Fidelity Viewpoints. “How to tame retiree health care costs”. Medicare Solutions Blog. Admin. May 15, 2013. May 20, 2013.