Wellabe Logo

Don't forget health care and insurance when retirement planning

Share this article

It's easy to focus solely on saving, but don't forget to include health care and insurance in your retirement planning

You probably won’t retire on a whim. Most likely, you’ll follow the usual path of retirement planning by meticulously saving and considering emotional readiness, but don’t forget to include health care and insurance while creating your retirement financial milestones.

Health care is typically one of the largest expenses for retirees. The costs of health care in retirement are expected to rise annually, and estimates show that a couple retiring at age 65 will need about $315,000 to cover medical expenses during retirement. Learning how to save for health care in retirement and creating a plan may help you prepare for tomorrow and offset the rising costs.

Before age 65

Choosing which health insurance option is best for you depends on your personal situation, including factors like how early you retire, your health history, your current health care needs, and your budget. If you retire before you’re 65 years old, you have options to get the health care coverage you need:

  • Check your spouse’s health insurance plan: If your spouse is still working, this may be a good option as long as his or her health insurance covers spouses or families.
  • Shop private medical insurance plans: These plans can be expensive, but they can also be personalized to fit your needs unmet by other insurance plans.

After age 65

Once you turn 65 years old, you are eligible for Medicare. It is divided into parts, and each part is designed to cover certain areas of health care costs:

  • Medicare Part A covers inpatient hospital stays, skilled nursing care, some home health care, and hospice care.
  • Medicare Part B covers preventive costs associated with doctor visits, medical supplies, and mental health care.
  • Medicare Part D helps cover the cost of prescription drugs.

While that seems like a lot of coverage, Medicare doesn’t cover everything. Medicare Supplement insurance may help you pay for expenses that Medicare doesn’t cover, such as coinsurance, copayments, and deductibles. But you’ll still have to pay out of pocket for many services, such as dental, vision, and hearing coverage. Although, it is possible to find low-premium, full-service vision and hearing plans, and using a provider within a dentist network can usually provide savings.

While health retirement planning, you could also consider whether a Medicare Advantage plan, an alternative to Original Medicare known as Part C, would be a better financial fit for you. Medicare Advantage plans have lower premiums, but they have higher deductibles. They also don’t cover everything, so you still may need to purchase supplemental insurance, such as Hospital Indemnity insurance, to help with out-of-pocket costs for hospital stays.

Other considerations for health care in retirement

Original Medicare, Medicare Advantage plans, and Medicare Supplement insurance cover routine care and emergency procedures, but what happens if you need care for a longer period of time?

About 60% of people will need long-term care at some point, according to the U.S. Department of Health and Human Services. Medicare only pays for long-term care if you require skilled services or rehabilitative care. Long-term care insurance is a private insurance option, but certain medical conditions may disqualify you from coverage, or the premiums may be cost prohibitive if you wait too long to sign up.

Short-term care insurance may be a better fit for you, depending on your circumstances. If you suffer an unexpected illness or injury and need care to help you recover after you leave the hospital, Medicare won’t cover all the costs. Short-term care insurance covers skilled and custodial care, so you don’t have to drain your savings account or retirement income to receive the recovery assistance you need.

A financial advisor for seniors can help you learn how to save for health care in retirement and avoid retirement planning mistakes, such as not buying the right insurance at the right time or planning for the unexpected.

You can never budget and plan for retirement too soon. If you ensure all your needs are taken care of, including health care in retirement, you can do everything possible to make sure your “golden years” are indeed golden.

Share this article

Supplemental health plans

Understanding your insurance options in retirement

Kelly Rayburn, AVP national sales and distribution at Wellabe, and Olga Villaverde, from Lifetime TV’s The Balancing Act, discuss the areas that primary health plans and Medicare may not cover and how you can protect yourself with supplemental plans.

Learn more about supplemental health plans

More topics at thebalancingact.com

Request a free quote

Call 866-739-8143 or click the button below to have an agent contact you to develop a personalized free quote for any of our insurance plans.