You have been listening to the experts, staying informed, and doing your best to prepare for retirement. Determination shows as you do all the right things as you work on achieving the goal of your retirement plan. You have the age in mind when you get to quit work forever.
Many people do not consider one thing as they plan for retirement. It’s overwhelming to think about the unknown and challenging to plan for it. This one thing can quickly change all of your retirement planning efforts: the cost of healthcare.
Most workers do not put a lot of thought into healthcare expenses as they save as much as they can to accommodate the lifestyle they dream about for retirement. The Employee Benefit Research Institute has a lot of interesting and frightening statistics. Over half of current retirees are surprised by the how much the expenses of healthcare have on their retirement savings.
The expenses of healthcare can quickly become one of your biggest expenses. Routine health care is expensive and when you add in planning for the expensive health problems that may arise along with any injuries or illnesses, it can be financially devastating.
Another potential health care expense is long-term care which many retirees are likely to experience during their lifetimes. Planning ahead for long-term care expenses can help you when the need arises. Verify your options and find out ahead of time what is covered and not covered and what to expect.
Medicare and Medicaid
Most retirees incorrectly believe that Medicare will cover their health care needs. Medicare does help significantly, however, it typically does not cover long-term care, deductibles, copayments, and coinsurance. Medicare also typically doesn’t cover routine care, dental care, ophthalmology appointments or hearing tests or hearing aids. Even routine care can cost hundreds of dollars, and those costs add up over time. The part you are responsible for can quickly add up to significant health care expenses which can eat away at your retirement savings.
One thing to consider is creating a health savings account (HSA). It is a retirement fund that is created specifically for health care costs. All funds contributed are tax deductible. When you withdraw money, there is no tax as long as they are being used to pay for eligible health expenses.
Another option for many Americans is to talk with a qualified medical planner to see if you qualify for Medicaid. Many people work hard to save for retirement and with the uncertainty of health and facing long-term care, it is often possible to qualify for Medicaid, hold onto your home, car, and other assets by discussing it with a Medicaid Planner. Planning ahead can help you preserve your savings and legacy.