Health care planning is a sensitive subject, but given rising expenses, no retirement plan is complete without some kind of provision for health care needs. Here are some guidelines and resources for estimating your needs and expenses.
Health care costs are rapidly emerging as a major expense item both before and during retirement. With lifetime employment a relic of the past and longevity on the rise, it’s more important than ever to estimate how much to save to cover costs in retirement and include those expenses in your financial plan.
Not only are health care costs a huge factor in retirement, but they are also becoming a larger concern for pre-retirees. So the conversation about health care costs should not be confined to the years immediately before and during retirement.
Health concerns and health care costs should be an agenda item at your annual meeting with your financial advisor — no matter what your age is. There are a number of issues surrounding health care and health care costs to be aware of, including the impact of how you take care of health care costs, what issues you potentially face pre-retirement, what you need to do to prepare for health care costs in retirement, and continuing adjustments you might need to make in your spending and planning during retirement.
Health care status. There is one aspect of health care and health care costs that is controllable amid many that are not: whether you are in good health or not. For many in poor health, discretionary spending on items such as vacations may have to be diverted into health care in retirement, an outcome that is preventable in most cases.
To determine the state of your current health, visit the MedicareNewsWatch.com website. It defines three states of health—good, fair, or poor—very concretely in terms of number of doctors’ visits per year, number of hospital admissions, and number of prescriptions.
Based on data from the site and your location, you can determine the impact your health status might have on your expenses in retirement. For many people in their early 50s, this is enough to motivate them to go home and get on the treadmill. Of course, there are circumstances that you have little control over, such as a cancer diagnosis. But even when disease cannot be avoided, becoming aware of the potential health care costs in retirement can make a difference in how you save and execute your financial plan.
The good news is that this amount is something you can save up front, as well as fund as you go. As you age, your health care costs typically continue to increase beyond even inflation, mostly because you are sicker and likely to require more hospital visits, more medications, and more care in the home or in a nursing home. A large portion of health care costs in retirement occurs in the last few months of life.
Reesa Manning is a Senior Vice President and Financial Advisor at Integrated Wealth Management, with an expertise in investment, retirement income, and financial planning. For more information, call Reesa at (760) 834.7200 or [email protected].
The above is being provided for informational purposes only and should not be considered investment, tax or legal advice. The information is as of the date of this release, subject to change without notice and no reliance should be placed on such information when making any investment, tax or legal decisions. Integrated Wealth Management obtained the information provided herein from third party sources believed to be reliable, but it is not guaranteed. Form ADV contains important information about the advisory services, fees, business, background and experience of advisory personnel. This form is publicly available and may be viewed at advisorinfo.sec.gov