Talk about a catch-22!! Maintaining a healthy lifestyle is supposed to reduce your risk of illness and lower your healthcare costs. And while living a healthy lifestyle does help to reduce your annual healthcare bills, that same lifestyle generally promotes longevity, which may translate to higher total healthcare expenditures over a longer lifetime!
Healthcare costs continue to skyrocket. So it’s clear that healthcare is an important factor when thinking about retirement. You can buy a cheaper car, or live in a smaller home, or take fewer vacations in order to stay within your retirement income budget. But you can’t do without necessary medical care. So what can you do?
• Understand what Medicare covers and what it costs. For instance, Medicare (Parts A, B, and D) generally provides benefits for inpatient hospital care, doctor’s visits, and prescriptions. But Medicare doesn’t cover everything. At the very least, you will have to account for deductibles, co-insurance costs for some services, and a monthly premium for Medicare Parts B and D.
• Don’t forget to factor in the cost of long-term care. It’s estimated that 70% of people over age 65 will require some long-term care services over their lifetime. Medicare doesn’t pay for custodial (nonskilled) long-term care, and Medicaid only pays after you and your spouse become impoverished by your medical expenses.
• Save, save, save! You are already probably budgeting for many of your retirement expenses. But if you don’t include the cost of health care in your plan, you are likely leaving out a big expense!
Fortunately, AARP has a great tool to help you figure out what your healthcare costs might be over your lifetime…and it’s free!
And it can even show you how making small changes in your lifestyle can make big changes in your future medical bills.
The moral of the story? Don’t wait until your health begins to fail to plan for healthcare costs in retirement. And be mindful that this isn’t a new problem. There have been a couple of new strategies that have come out in the last 18 months to help cover these costs. If you haven’t looked into it in a while, reach out to your financial advisor and at least find out what these new strategies are. They are at least worth a look!