Don’t Forget the Medical Expenses

You have saved your money for years and the day has finally come, you are retiring. You have saved your money for years, and now you have a nice nest egg to live on. What would happen to the nest egg if you or your spouse gets sick? Will that nest egg be enough? While Medicare is the cornerstone of medical coverage, covering 60% of all healthcare expenses, it does not cover long-term care and a few other healthcare expenses. That leaves the other 40% of medical expenses and other major healthcare expenses including dental, vision, prescription and long-term care expenses coming out of your hard-earned savings.

What steps should pre-retirees take to ensure that there is enough money for medical expenses? The first step is to make sure you have a plan. By having a plan, retirees can be prepared for the unexpected expenses, avoiding the problems that are associated with reacting to unexpected events. According to Healthview Services 2015 retirement Health Care Cost Data Report, the average out-of-pocket expenses for a couple age 65 id $395,000. Long-term costs can average $140,000 per person, but these costs can be misleading.

The next step is to prepare for your needs. Don’t rely on averages to determine what you will need for medical expenses come retirement. The best plan is to run a health assessment to estimate what the cost will be for you. The health assessment will consider gender, family history, and life expectancy to estimate the cost during retirement. Once you have your assessment, study up on Medicare coverage. It is complicated and not free. Each part covers something different, and there are traps you will need to navigate to find the right coverage for you.

Another step is to max out your health savings account. If you have a high deductible health insurance plan, you may have an option to start a health care savings plan. The money is tax deductible and grows tax-free. Once you have looked at all you options, talk to your family. They need to know what you expect and how you want your needs met should an illness interrupt your retirement.