“What am I going to do about healthcare?”
While our advisors obviously get asked a lot of retirement questions, healthcare usually tops the list.
It’s easy to understand why.
Planning for 30 years of retirement healthcare expenses can be overwhelming, especially when you realize an average 65-year-old couple will need more than $363,000 in today’s dollars to cover the costs.
But dollars and cents aside, where will you get your insurance?
If you’re retiring early, will your employer cover you? If you’re relying on Medicare, do you know your options?
If you dream of retiring before Medicare kicks-in at age 65 – you need a plan for how you’ll bridge your healthcare coverage gap. Consider these 6 main options:
Even if you don’t plan on retiring before 65, you should still at least think about what you’ll do if you’re forced to retire early.
That’s because close to half of all current retirees had to leave the workforce earlier than they originally planned,[iii] and according to the U.S. Census Bureau, the average retirement age for a U.S. worker is 63 – not the much-assumed age 65.
If you’re already receiving Social Security benefits when you turn 65, you’ll be automatically enrolled in Medicare Part A & Part B (known as “Original Medicare”). If you’re not, you’ll get a 7-month Medicare sign-up window that begins when you’re 64 years and 9 months old (there are some circumstances in which you can enroll sooner).
And, as you probably know, there’s more to Medicare than just Parts A & B:
If you decide to keep working past age 65 and delay your Medicare enrollment, be sure to let the government know. If your employer has 20 or more employees, you can usually postpone; but if there are less than 20, you generally must enroll when you turn 65 since Medicare is considered your primary healthcare coverage.
No matter if you plan on funding retirement healthcare yourself, getting covered through an employer, or through Medicare, you (and your advisor) need to prepare for rising costs.
According to a five-year study by the Health Care Cost Institute, healthcare prices have been rising three times faster than the average inflation rate.
If you’re looking for a tax-friendly way to pay for these expenses down the road, consider saving in a Health Savings Account (HSA), available to workers with a high-deductible insurance plan.
You’ll save on taxes three different ways:
Another way to help keep healthcare costs down in retirement? Invest in your health now. Prioritizing your health and wellness will also help you achieve a more fulfilling retirement, putting you on a path to live a longer, healthier life.
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1The NBRI Circle of Excellence Award is bestowed upon NBRI clients meeting one or both of the following criteria: Total Company score at or above the 75th percentile of the NBRI ClearPath Benchmarking Database and/or improvement of five (5) or more benchmarking percentiles in Total Company score over the previous survey.
2Scott Hanson (2011, 2012, 2013, 2014, 2015 & 2016) and Pat McClain (2012, 2013, 2014, 2015 & 2016). Barron's© magazine is a trademark of Dow Jones L.P. The ranking reflects the volume of assets overseen by the advisors and their teams, revenues generated for the firms and the quality of the advisors' practices.
3As of 12/20, Allworth Financial, an SEC registered investment adviser and AW Securities, a registered broker/dealer have approximately $10 billion in total assets under management and administration.
4Barron’s 2020 Top 100 RIA Firms. Barron's© magazine is a trademark of Dow Jones L.P. The ranking reflects the volume of assets overseen by the advisors and their teams, revenues generated for the firms and the quality of the advisors' practices.
✢Scott Hanson, Investment Advisor 2005, 25 most influential people in the financial services industry. The ranking reflects 25 people who Investment Advisor magazine believes have had or will have the greatest influence on the financial services industry.
✼Pat McClain, InvestmentNews 2014, Invest in Others Community Service Award, presented to an advisor who has made an outstanding impact on a community through managerial contributions to a non-profit organization.
†Financial Times, FT 300 Top Registered Investment Advisers, June 2019. The ranking reflects six areas of consideration including the company's years in existence, industry certifications of key employees, AUM, asset growth, SEC compliance record and online accessibility and calculates a numeric score for each company.
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.