just right U

Healthcare Planning and Retirement

Health10_28223 If you’re like most of America’s workforce, you probably can’t wait for retirement. What could be better than relaxing on a beach in Belize, knowing you’ll never have to work again? The first time you need healthcare benefits and realize you aren’t covered, however, may be a rude financial awakening.

The percentage of companies offering retirement benefits has shrunk in recent years simply because the cost to cover every retired employee is just not feasible. And, even if your employer says you’re insured, circumstances change, and there is no guarantee that your entire retirement will be covered. Unfortunately, this leaves you on your own to figure out stable coverage.

The key is to start saving now. Financial planners will tell you over and over that you need to save enough in your retirement plan to cover the basic needs you enjoy now – and that includes your health benefits as well. But, in many instances, what you enjoy today doesn’t include such things as long-term care or medication you may need as you age. In order to truly enjoy your retirement, it is imperative to start planning for your future health needs right now.

Prepare Your Financeshealth03_medicare_115761634

According to Medicare, it will cost approximately $240,000 (as of 2015) for healthcare in your retirement. This amount of money includes cost-sharing expenses associated with Medicare, premiums for Medicare prescription drug coverage, and any out-of-pocket expenses not covered by insurance.

Long-term care is usually fairly expense, and there’s an increased chance of needing assisted care at some point in your retirement. According to the 2015 Cost of Care Survey conducted by Genworth Financial,* the average monthly cost for an assisted living facility is $3,600, and the average monthly price for a nursing home ranges from $6,500 to $7,600 (depending on the type of room). As you can see, the aging process is not cheap!

Here are some ways to prepare your finances, to prevent your family members from taking the brunt of these costs:

  • Calculate current healthcare expenses and identify areas where your spending may increase or decrease after retirement – this will help you develop a rough estimate of how much you need to save. If necessary, speak with a financial advisor during this process.
  • Evaluate your life insurance policy and modify it (if necessary).
  • Figure out a way to cover the estimated income gap that may exist between your income now and what you’ll need after you retire. Some ideas to consider include working longer before retiring, cutting spending now, increasing the contributions to your retirement plan, or seeking part-time employment after retirement.
  • Ask yourself these questions: Will my current health insurance policy and life insurance policy end with my employment? Should I increase coverage to ensure future security for a surviving spouse or child? Are there any other reasons to increase coverage, such as to contribute to a grandchild’s college fund?

health09_button_133475000Consider Your Options

When it comes to healthcare after retirement, there are many options to consider. If you’re 65 or over when you retire, Medicare is a huge relief. Generally, Medicare covers about 60% of healthcare costs, not including long-term care. However, if you have not reached the magic age, there are still a variety of healthcare avenues available to consider:

  • Employer-sponsored retiree health plans
  • COBRA, which gives you employee health care for up to 18 months after you retire (for a pretty stiff premium, though)
  • Coverage on a younger spouse’s employee health plan
  • Individual healthcare plans offered on the Health Insurance Marketplace
  • Long-term care insurance, which covers home health care, nursing care, assisted living and other long-term care expenses

Even if you are covered by Medicare or Medicaid, you may need additional dental, vision, or hearing coverage, as these benefits are not always included in these programs. Be sure you know exactly what you are getting before you retire so you are not left without coverage after you retire.


 A Quick Guide to Medicare and Medicaid health04_medicaid_291062819


If you are 65 or older and a citizen of the U.S., you’re automatically enrolled in Parts A and B of Medicare. Parts C and D of Medicare are not automatically provided and must be purchases individually if desired. Let’s take a look at what is generally covered:

  • Part A covers hospitalization costs.
  • Part B covers doctor visits and outpatient/preventative costs, such as physical therapy or diabetes testing.
  • Part C is known as Medicare Advantage, and provides extra benefits not included in Parts A and B.
  • Part D provides prescription drug coverage.



If you are 65 years of age and older, a citizen of the U.S., and fall within certain income and asset limits (which differ by state), you qualify for Medicaid. Medicaid covers the following:

  • Doctor visits
  • Hospital expenses
  • In-home care
  • Nursing home care
  • Long-term care costs

Medicaid does not cover prescription drug costs, but it may cover the premium for Medicare Part D.


 health05_IRA_2833010Sources of Funds

The following provides you with a list of funding sources you can use to pay for your healthcare costs when you are retired:

  • Self-funding using investments and savings
  • Social Security
  • 401(k)s
  • IRAs
  • Pensions
  • Home equity
  • Health Savings Account (HSA)
  • Medicare
  • Medicaid

Obviously, the most reliable source would be your own savings and investments because you have complete control over how much you save or invest, where you save or invest, and when you withdraw your savings or investments. The best way to cover healthcare costs is to have as much cash available as possible, which is why it is so important to save all you can throughout your working life. Keeping a budget, and staying diligent in your efforts will pay dividends throughout your retirement.

 Keeping Health Costs Downhealth02_money_125307056

Are you ready to retire? Have you saved what you need to in order to be comfortable in your new circumstances? If you are thinking you have not prepared as you should, don’t worry. Today is the day to get started. Take a look at a few proactive steps to keep your healthcare costs as low as possible as you move into the future:

  • Start saving now. If you just graduated from college and you’re looking at a new job, you’re probably not thinking about retirement – but you should be! Saving now will help you prepare for a bright financial future. Just a little today will pay huge dividends tomorrow.
  • Stay as healthy as you can. Eat right, exercise, and kick bad habits, such as smoking. The healthier you are, the lower risk you pose for health insurance companies, so you will subsequently be charged lower premiums.
  • Understand ALL of your options. Review the options that have been discussed in this module, and speak with a financial planner who can help you determine the best plan or combination of plans to save you money.
  • Choose your health providers ahead of time. Before an emergency strikes and you don’t have time to compare pricing among competitors, take the time to research healthcare providers in your area. Find the best value for a primary care physician, specialist for pre-existing conditions, urgent care, and hospital care. Make note of your choices, and update them regularly, so you are prepared for the cost of your healthcare needs.


Your healthcare needs after retirement should be of serious concern, but not serious worry. Take the time now to save as much as possible, in order to prepare for a life without consistent paychecks. When you’re about 10 years away from retirement, review your options more carefully, and start to devise a written plan for managing your finances. Update your retirement plan periodically to stay updated as your financial situation changes. If you are committed to following the tips presented in this module, you will be well prepared for any healthcare need that comes your way after retirement.