SMART STRATEGIES FOR HEALTHCARE COSTS
ARI BAUM, CFP®
WHEN YOU THINK ABOUT RETIREMENT, YOU LIKELY PICTURE SANDY BEACHES, EXTENDED TIME WITH FAMILY, OR FINALLY WRITING THAT NOVEL. HOWEVER, BEYOND THE PEACEFUL HORIZON OF YOUR POST-WORK YEARS, THE DARK CLOUDS OF HEALTHCARE AND LONG-TERM CARE COSTS ARE GATHERING. MAPPING OUT THESE EXPENSES IS CRUCIAL TO ENSURE YOUR RETIREMENT REMAINS ON THE SMOOTHEST TRAJECTORY POSSIBLE.
Healthcare costs in retirement can be as unpredictable as the weather, with prices fluctuating and often spiking without warning. Medicare provides a basic level of protection, but it’s far from foolproof. From premiums to prescriptions, the costs can quickly accumulate, potentially derailing your financial plans.
Prescription drugs, particularly new ones without generic versions, are becoming increasingly expensive. This can lead to a coverage gap commonly known as the “donut hole,” where you’re forced to cover a significant portion of drug costs out of pocket. Planning for these expenses is essential to maintain your financial stability.
Long-Term Care: The Unexpected Stowaway
Long-term care costs are like an unexpected stowaway on your retirement voyage. Here’s a startling fact: about 70% of us will need some form of long-term care after age 65. Whether it’s help at home or full-time care in a facility, these services come with a hefty price tag that climbs each year.
Enlisting a Financial Professional
Your First Mate
Charting retirement waters alone can be daunting. That’s why teaming up with a financial professional isn’t just smart — it’s essential. Here’s why they’re your ideal first mate:
Custom Coordinates: Your financial journey is as unique as your fingerprint. A professional can draw a map that matches your specific health needs and financial landscape.
Medicare Mastery: They know the ins and outs of Medicare and supplemental plans. With their guidance, you can potentially avoid those costly out-of-pocket hits.
Funding The Journey: If you need strategies for financing long-term care, a financial professional will have a treasure chest of options, from insurance policies to investment strategies tailored just for this purpose.
Adjusting the Sails: The seas of retirement are ever-changing. A financial professional keeps a keen eye on the horizon for law changes and policy updates that can impact your path.
Ready Your Retirement Vessel
With a skilled financial professional as your navigator and a detailed plan as your map, you can confidently sail through the complex seas of healthcare and long-term care costs. This strategic preparation ensures you can relish your retirement, free from the turbulence of unforeseen expenses.
Smart Strategies for Healthcare Costs
Here are some specific strategies to help you master these stormy waters:
Understand Your Medicare Options: Medicare comes in multiple parts — Part A (hospital insurance), Part B (medical insurance), Part D (prescription drug coverage), and Medicare Advantage Plans (Part C). Each has different costs, coverage, and rules. Reviewing these options carefully and choosing the right combination can save you a significant amount of money.
Consider Supplemental Insurance: Medigap policies can help cover some of the costs that Medicare doesn’t, like copayments, coinsurance, and deductibles. Compare plans to find one that offers the best coverage for your needs.
Plan for Out-of-Pocket Costs: Even with Medicare and supplemental insurance, you’ll have out-of-pocket expenses. Creating a dedicated savings account for healthcare expenses can provide a cushion for unexpected costs.
Take Advantage of Health Savings Accounts (HSAs): If you have a high-deductible health plan, an HSA allows you to save pre-tax dollars for medical expenses. Funds roll over year to year and can be a valuable resource in retirement.
Explore Long-Term Care Insurance: Long-term care insurance can help cover the costs of services not typically covered by health insurance, Medicare, or Medicaid. Policies vary widely, so it’s essential to understand what is covered and the limitations of each plan.
Long-Term Care: Proactive Planning
Given the high likelihood of needing long-term care, proactive planning is essential. Here are some steps to consider:
Assess Your Needs Early: Determine the type of care you might need based on your health, family history, and lifestyle. This assessment can help you choose the right insurance coverage and savings plan.
Explore Different Insurance Options: Long-term care insurance can be expensive, but hybrid policies that combine life insurance with long-term care benefits might offer more value and flexibility.
Consider Alternatives: Besides insurance, other options like home equity, annuities, and retirement savings can help cover long-term care costs. A financial professional can help you identify the best mix of resources.
Anchors Aweigh
Retirement should be a time to enjoy the fruits of your labor, not worry about unforeseen expenses. By understanding your healthcare and long-term care needs, exploring your options, and enlisting the help of a financial professional, you can set sail with confidence. Reach out to a financial professional today to craft a retirement plan that’s as secure and personalized as your future deserves to be. Your best adventure awaits.
The content is developed from sources believed to be providing accurate information. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results. This information is not intended to be a substitute for specific tax or legal advice. Consult with your financial professional regarding your specific situation.
Ari Baum, CFP® is the founder and CEO of Endurance Wealth Partners, with over 26 years of experience in the Financial Services industry. He brings his in-depth experience to Conceive. Believe. Achieve. for his clients.
Securities and Advisory services offered through Prospera Financial Services Inc. Member FINRA/SIPC. Brokerage and Advisory accounts carried by Wells Fargo Clearing Services, LLC.
