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Your retirement years are the time when you want to relax, travel and enjoy the fruits of your labor. However, in retirement planning, too many people forget about healthcare.
While you worked as an employee in the corporate sector for 30 to 50 years, you most likely had the benefit and convenience of medical healthcare, either paid in full or in part by your employer in a group health plan. All you had to worry about was how much money was withheld from your paycheck each month for your share of the premium and perhaps which HMO or health care plan to choose.
Jump to age 65 when you retire and are no longer an employee or a member of the group health plan. You are now responsible for obtaining and paying for your health care premiums. And you are responsible for paying any amounts over what your health care does not provide. Will you be able to afford health care after retirement?
How Much Will You Need?
A report from the Fidelity Consulting Services in March of 2009 showed that a typical 65-year old retired couple will need $240,000 for health care costs during their retirement years. That figure is up 6.7 percent from 2008, and anyone at or near retirement should be aware of the escalating health care costs. The Fidelity figure is calculated even after a couple is covered by Medicare and does not include costs for prescription medication, long-term care, or dental costs.
Why does health care cost so much after retirement? Some of the reasons for the jump in health care cost estimates is the increasing number of physician visits, more expensive diagnostic testing, and general inflation.
How to Plan For Retirement Health Care
It is important for any individual or couple planning a retirement savings to take into account the rising costs of health care. There are many things one can do before retirement to help save for medical costs.
- Set up a specific Retirement Medical Savings Account – Many people can start putting money each month into a specific account earmarked for medical costs. A specific savings vehicle, such as a Health Savings Account, may be a great way to save for retirement health care costs with tax advantages.
- Open a separate IRA – You could also open an IRA account separate from your regular retirement IRA. This gives you similar tax advantages and helps earn more on the money you contribute.
- Retire in stages – Retirement doesn’t necessarily mean you have to stop working cold turkey. At retirement age, you could drop your normal full-time hours to half-time or other part-time scheduling. This may allow you to continue earning money and continue on the company group health care plan.
- Preventative care – Before and during retirement, you should be proactive in your preventative care. Always attend your regular checkups and physicals. These screenings can help detect early health care concerns before they escalate.
Planning your health care during retirement alone can be a daunting task. It is always recommended that you also work with a qualified retirement wealth manager like www.kenhimmler.com or retirement asset management company such as www.iamllc.biz to help you plan for your retirement health costs.
Authored by Kenneth Himmler, Sr.