It is no secret that healthcare is becoming an increasingly serious problem for most of us as we grow up. More diseases are likely to develop, which means that more money is spent on visiting health care workers and buying medicines. Even if you stay healthy in the coming years, the costs of preventive treatment and preparing for potential unexpected health situations are rising.
Health related expenses are likely to be one of the largest components of your retirement budget. You must be prepared to pay for comprehensive insurance coverage and potential out-of-pocket expenses for care. Here are three strategies to help you cope with these critical retirement expenses.
Learn how Medicare works.
The good news for Americans aged 65 and older is that you can qualify for Medicare. This increases dependence on medical services. At the age of 65, most people automatically get the right to participate in Medicare Part A for free, which primarily covers coverage of hospital stays and qualified medical care. Medicare Part B must be purchased (approximately $ 109 per month in 2017 for most retirees). Part B covers the costs of visiting a doctor, but with some deductibles. Many people purchase additional coverage to use for personal expenses, such as a Part D prescription drug plan or Medicare Supplement policy.
Time is important with Medicare. Registering for the first time you qualify for coverage will keep costs at the lowest level. If you support insurance through your employer after age 65, you can defer Medicare registration without risking late fines.
If you retire before age 65, you will need to purchase insurance on the open market to cover health-related expenses until you become eligible for Medicare. Individual coverage as you get older tends to become more expensive, so work with the expenses in your retirement budget. Some employers offer retirement health insurance benefits. Check with your personnel department to find out if this option is available to you.
Allocate sufficient funds for health expenditures
As your retirement strategy develops, make sure that you have money allocated for health care expenses that will be your responsibility. According to one estimate, an average 66-year-old couple will have to use more than half of their lifelong early social security benefits to pay for health care costs through retirement. Most people may have to rely, in part, on their own savings to offset some medical expenses.
Along with other retirement savings, you may want to create a Health Savings Account (HSA) during your working years. The HSA is designed to help create cost-effective savings to pay for the medical expenses that you bear during your working years. However, any remaining funds can be applied to health care costs later in life, including premiums for Medicare and long-term care insurance. Keep in mind that you must be enrolled in a high-paying health insurance plan to open an HSA.
Focus on your own health
One way to potentially limit health care costs during the retirement period is to create or maintain a healthy lifestyle. The small changes you make today, such as proper nutrition or the priority of sleep, can reduce the likelihood that medical problems will affect you later in life. Being physically active can also benefit your finances when you retire - according to the American Heart Association, this can potentially help you save $ 500 a year in health-related expenses today.
Having a plan does not guarantee that you will avoid health problems, but you can find comfort in understanding how you can cope with health care costs when you retire.
