Good health is one of our greatest assets, but as we age, the reality of increased health care expenses can no longer be ignored. Optimism and healthy habits like exercising and eating well are important, but financial planning for potential health-related costs is just as critical. At Wealthy Choices®, I guide clients in creating comprehensive plans that account for these risks and help ensure their financial stability, no matter what the future holds.
The Financial Impact of Health Care in Retirement
According to a 2014 Fidelity Benefits Consulting study, a couple aged 65 can expect to spend $220,000 on health care costs during retirement. This estimate covers expenses like Medicare premiums, deductibles, co-pays, and other out-of-pocket costs—but it does not include some of the most significant financial risks:
- Long-Term Care Costs
- The national median annual cost for a private nursing home room was $97,455 in 2017. With 70% of individuals over 65 needing some form of long-term care, these expenses can add up quickly.
- Inflation in Health Care Costs
- Health care costs have historically risen at an annual rate of 6.9%. Without a plan that factors in inflation, retirees may find their purchasing power diminished over time.
- Uncovered Expenses
- Items like dental services, hearing aids, acupuncture, and chronic illness treatments (e.g., diabetes, arthritis, heart disease) often fall outside standard Medicare coverage, adding another layer of financial strain.
Preparing for the Unexpected
When a loved one requires long-term care, families are often faced with the equivalent of managing “two homes”: one for the healthy spouse and another for the spouse in care. While some families can self-insure, most will need to plan for this scenario with additional financial tools.
Here are three strategies to create a safety net:
- Long-Term Care Insurance
- Policies designed specifically for long-term care can help cover costs for nursing facilities, home care, or assisted living.
- Insurance Riders
- Some life insurance and annuity products offer riders that include long-term care benefits, providing an integrated solution for both life planning and care needs.
- Medicaid Planning
- For those who may exhaust their resources, planning for Medicaid eligibility can ensure access to necessary care while protecting some assets.
Building a Comprehensive Health Care Plan
A robust health care plan includes:
- Budgeting for Known Costs: Medicare premiums, co-pays, and expected out-of-pocket expenses.
- Preparing for Inflation: Adjusting your plan to account for rising costs over time.
- Mitigating Long-Term Care Risks: Exploring insurance options or other safety nets to handle significant care expenses.
At Wealthy Choices®, I work with clients to evaluate their financial resources and design strategies to address potential health care costs. By breaking down expenses in manageable steps and building a tailored plan, you can approach retirement with confidence.
Don’t Leave Your Health Care to Chance
Ill health can lead to unexpected costs that jeopardize even the best-laid financial plans. Taking proactive steps now can protect your wealth and provide peace of mind for you and your loved ones.
Ready to Safeguard Your Future?
If you’re concerned about the financial risks of ill health in retirement, I’m here to help. Contact me at 781-577-2311 or visit WealthyChoices.com to start building a plan that ensures you’re prepared for whatever lies ahead.
