Managing Health Costs for Retirement
It is no secret that as we get older, health care becomes more and more important to most of us. More diseases are likely to emanate, and this implies more money will be spent on buying medicines and visiting health workers. Even if during your last years, you stay healthy, the expenses for health care and preparation for unplanned health situations increases. Health expenditure is probably one of the major components of the pension budget. You must be ready to spend for full insurance coverage and all attendant costs.
Here are 3 strategies to help you control these critical retirement costs.
- Find out how Medicare works
The good news for Americans over 65 is that you qualify for Medicare. This makes the dependence on health care more accessible. At age 65, most people automatically qualify for Part A of Medicare, mainly for hospitalization and skilled care. Part B of Medicare must be purchased (i.e. about $ 109 per month in 2017 for most retirees). Now, Part B insures the costs of visiting the doctor, but with certain deductibles. Many people purchase additional insurance to insure their expenses, such as a Part D prescription drug policy or a Medicare supplement policy.
Timing is important with Medicare,. By taking out a first insurance, the costs will remain low. If you have insurance with your employer after age 65, you can defer your Medicare registration without the risk of late fees. If you retire before age 65, you must purchase insurance in the open market to insure health-related expenses until you qualify for Medicare. Individual insurance are likely to be more exorbitant with age, so invest the costs in your budget for retirement. Some labor employers offer health insurance in retirement as an advantage. Ask your human resources department if this option is available to you.
- Set aside enough funds for health-related costs
When developing your income strategy for retirement, ensure you have access to money for the health care you are responsible for. According to one estimate, the average 66-year-old couple has to spend more than half of their social security benefits to finance their health care costs in retirement. Most people probably depend in part on their savings to offset some medical expenses.
With other savings for old age, during your working years, you can create a Health Savings (HSA) Account. HSAs are formulated to use tax-relieved savings to pay for medical expenses incurred during working hours. However, all remaining funds can be used for health care later in life, including the Medicare and Long Term Care Scholarships. Note that you must be enrolled in a high deductible health policy in order to open an HSA.
- Concentrate on your health
One way to control health costs in retirement is to create or maintain a healthy lifestyle. Small changes made today, such as proper nutrition or the priority given to sleep, can reduce the risk of medical problems affecting you in the future. Being physically active can also be beneficial for retirement finances – this according to the American Heart Association, may help you save $ 500 per year on health-related expenses. Having a policy does not guarantee to avoid health problems, but you can find comfort in how to deal with the costs of health care in retirement.