Healthcare Risk

Expect the Unexpected

When you retire, there are many factors to consider, such as how much money to save, when to start receiving social security, and what you’ll do with your free time. But there’s one considerable expense that often surprises retirees: healthcare. It’s essential to plan for healthcare costs because they can be one of the most significant expenses in retirement. 

What is Covered under Medicare

Some assume that Medicare, the government health insurance for retirees, will cover all their healthcare costs. While Medicare does provide coverage, it doesn’t cover everything. You’ll still have to pay for premiums, deductibles, copays, and coinsurance. Also, if you want coverage for prescription drugs, vision, and dental services, you must buy additional insurance. Medicare also doesn’t cover stays longer than 90 days in a skilled nursing facility.  

Plan for the Cost of Healthcare

So, how much can you expect to spend on healthcare? The amount usually goes up as you get older. A healthy couple who is 65 years old can expect to pay about $12,000 per year on healthcare expenses. By the time they reach 75, that amount will increase to about $22,000. And at 85 years old, it will be around $38,000. That’s more than three times what they spent at 65.  

Think of retirement in three phases. The first phase is the “go-go” years when you’re healthy, active, and enjoying life to the fullest. The second phase is the “slow-go” years when you might need more medical attention and assistance with daily tasks. Finally, the third phase is the “no-go” years when you need help with cleaning, shopping, or even medical care.  

Healthcare costs can increase during these phases, but there are ways to plan for them. A financial advisor can help you with products like linked benefit insurance, which combines life insurance with long-term care benefits. This can help pay for services like nursing care and medical assistance. There are also other insurance options, like fixed index annuities, that can increase your income. If you can’t take care of yourself, Medigap policies can cover some expenses that Medicare doesn’t.  

Talk to a financial advisor to see if these products are right for you and can help you plan for healthcare costs in retirement. 

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