No matter what your age, it’s important to start preparing for the time when you eventually
retire. One of the biggest financial issues you may encounter by the time you’re ready to stop
working is how much money you will need for your health care. In general, this can be a sizable
amount. On average, a couple at age 65 would need around $220,000¹ to pay for costs related
to their health. This estimate doesn’t even take into account any preexisting chronic conditions
Unfortunately, the one retirement mistake people can make is to believe that once they reach
the age of 65 and they are eligible for Medicare² that it will cover the cost of all of their medical
needs. In reality, Medicare isn’t free and people are responsible for covering their premiums,
deductibles and copays. Retirees who require coverage for dental care, prescription drugs,
vision or hearing are also required to either buy additional insurance³ or pay for these services
out of pocket.
However, there is good news. There is a lot you can do to manage the costs of your medical
care. Planning ahead can really be a lifesaver to offset your medical costs once you retire. These
are ways you can ensure that you are covered:
- Health Care Investment Account: Creating an investment account for your estimated medical
costs can be a great idea, and you should ensure that it’s kept separate from your other
retirement money. Estimating how much you will need for the future can help you to
proactively save to offset these expenses. Additionally, these types of accounts allow you to
save money on your taxes.
- Consider Long-Term Care Insurance: Over half of people 65 or older will require long-term
care⁴ at some point in their lives. Getting a long-term care insurance policy5 can ensure that
your future health needs are met if you require assisted living, home care, or a nursing home.
This option is also expensive, but it is well worth it if you save early on and already have chronic
health conditions or a family history of certain conditions.
- Take Care of Your Health: Obviously, if your health is better after retirement age, it will be
easier on you from a financial standpoint. Your health care expenses will be less than that of
someone who isn’t in good health. Eat a well-balanced diet, incorporate physical activity into
your everyday routine, maintain a healthy weight and get a good night’s sleep daily. This offers
you a dual benefit in enjoying better health than your peers and helping you save money in the
- Use COBRA: If you had health insurance through your last job, you can take advantage of
COBRA6 to continue using it after you retire. COBRA allows you to use your work health
insurance for up to 18 months after you leave the job as long as the company employs at least
These are great ways to go about planning for the time you eventually retire, and they can help
you to save money on any future medical related costs.
To discuss how you can increase your odds of success in retirement, please reach out to
Absolute Return Solutions at (888) 500-5830.