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7 Principles to Help You Plan for Retirement Like a Pro: Principle #4: Don’t Let Retirement Health Care Costs Be a Roadblock

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When you retire, and say goodbye to co-workers, you also get to say goodbye to a lot of work related expenses like work clothes and gas for your commute.

You’ll find that in retirement you end up spending a lot less money in many areas of life, except for one.

Health Care Costs Skyrocket in Retirement

Health care costs can drastically increase during the retirement years and you may find your health increasingly becoming a costly concern. According to a recent study, “a 65-year-old couple retiring in 2016 will need an estimated $260,000 to cover health care costs in retirement.” That’s much more than most people are accustomed to spending on health care.

On top of this overwhelming figure, the same study claims that, on average, “a 65-year-old couple would need $130,000, in addition to savings for retiree medical expenses, to insure against long-term care expenses.” If you’re thinking that Medicare will help shoulder some of that financial burden, it’s important to note that Medicare doesn’t generally cover long-term expenses except in limited circumstances.

To make matters worse, retirement health care costs can climb even higher for those who rely on expensive prescription medication. Even with Medicare, co-payments, deductibles, and prescription drug out-of-pocket expenses still add up over time – not to mention over-the-counter medications, most dental services, and other long-term care expenses.

These figures can be intimidating, and if  you aren’t prepared , retirement health care costs have  the potential to become serious roadblocks on your retirement journey.

 

How Can You Be Prepared for a Longer Journey?

Retirement health care costs can be overwhelming, especially if you aren’t prepared for the additional expenses. However, if you have an idea of what you’re up against, you may be wondering what it takes to keep health care costs from derailing your other retirement goals. Here are two practical steps you can take today to address the health care costs of retirement head-on:

  1. Include retirement health care costs as a separate expense in your retirement plan. To be safe, go ahead and assume a 7 percent annual inflation rate. This puts your retirement health care costs on the map, and provides you with at least one measure for planning ahead.
  2. Begin assessing your long-term care alternatives now. This is something to begin ideally when you’re still healthy, or at least by age fifty. You will hopefully still have most options available to you as you make your plan.

Retirement health care costs don’t have to stand in the path of your retirement journey. Factor them in now with real numbers so that you can be prepared to purchase the right long-term care options for your family.  Take the time to plan accordingly and you’ll be that much more likely to reach your desired destination.

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