Health Care Planning: The Fourth Key In Our RichLife Retirement Success Strategy™
While you can’t plan for everything in life, the better you take care of yourself, the less likely your healthcare costs will run you into the ground.
Statistics show that if you exercise, keep your weight at a healthy level, and stay away from smoking and alcohol, you will have fewer health problems and consequently fewer health expenses.
Have you factored your healthcare costs into your retirement plan?
As you get closer to retirement, there are several big decisions you need to make, including when to stop working, what age to start claiming Social Security, how to pay for health care, and how to generate income from your retirement assets.
These decisions are interconnected in your RichLife Retirement Success Strategy™ and can make a difference in your living costs and lifestyle in retirement — and when you can retire.
It's not uncommon to see someone retiring at 62 or 63 without considering the cost of their healthcare insurance until they turn 65 when they become eligible for Medicare.
In many cases, that insurance payment can be bigger than a mortgage payment -- an expense most people aren't prepared for financially.
So, you need to have a health insurance plan in place at least 6 months before you retire to cover that gap until you become eligible for Medicare coverage when you turn 65.
It's estimated that the average couple will need $295,000+ in today's dollars (don't forget that inflation will cause that number to rise in the future) for medical expenses in retirement, excluding long-term care.
Most people incorrectly assume Medicare will cover all of their health care costs in retirement. It doesn't.
Estimates show that about 15% of your annual expenses will be used for health care-related expenses -- this includes your Medicare premiums and out-of-pocket expenses. You need to carefully consider all of your options.
It's critical to have a Medicare strategy in place 6 months before you turn 65. That way you don't miss any of the critical enrollment pieces and dates which will help you avoid getting hit with unnecessary (and very costly) penalties.
You need to know which of the supplemental Medicare plans is going to provide you with the right kind of coverage for your individual health care needs. The wrong choice of supplemental coverage could create a huge financial drain on your savings and cause you to run out of money during your retirement.
You need to understand how Medicare Parts A, B, and D, as well as Medicare Advantage and "Medigap" supplemental insurance plans work, what's covered, what's not covered under each of the different parts and plans, and the different costs associated with each of them.
As a matter of fact, this information is so complex we have a health insurance specialist on staff at RichLife Advisors to ensure our clients get the best, most up-to-date Medicare and health care planning information possible.
My recommendation to all of our clients and anyone who reads this -- 6 months before you retire or 6 months before you turn age 65, get an insurance analysis done to make sure you have the right insurance plan in place for your situation.