The Challenge of Medical Care

When planning for retirement, many focus on saving for vacations, hobbies, or maybe a new home. But planning for healthcare often gets overlooked. Some may even assume that Medicare will cover all your medical costs once you turn 65.

It won't.

While Medicare provides a solid foundation, it doesn't cover everything, and the gaps can quickly add up. From routine doctor visits to unexpected medical emergencies, healthcare costs are one of the largest - and most unpredictable - expenses you'll likely face.

This week, we'll take you through the essential steps of planning for healthcare in retirement. From understanding the ins and outs of Medicare to navigating the complexities of long-term care, we'll cover the topics that matter most to your financial health.

Estimating Healthcare Costs in Retirement

So, how much will healthcare cost you? The short answer: more than you might think. The average couple retiring today will need around $300,000 to cover medical expenses throughout retirement, and that's just for the basics. If you need long-term care or expensive treatments, those numbers can rise even higher.

So how do you pay for these expenses? Medicare definitely helps. Medicare will help with hospital visits and doctor's appointments, but it won't cover services like dental care, vision, or hearing aids. And while Medicare can help with short-term care after a hospital stay, it doesn't pay for long-term care in a nursing home or assisted living facility. Later in this series, we'll dive deeper into what Medicare covers and how to supplement your coverage - including tax-efficient ways to save.

Long-Term Care Planning

We can't talk about healthcare in retirement without mentioning long-term care. Remember, the healthcare costs we outlined above don't include long-term care.

While Medicare covers some short-term stays in skilled nursing facilities, it doesn't cover long-term care or even ongoing in-home assistance. Unless you qualify for Medicaid, those costs are your responsibility.

The median cost of a private room in a nursing home is around $120,000 a year. Assisted living facilities? About $60,000 a year. And if you're planning to age in place and hire a health aide, expect to pay around $30 per hour - or $70,000 per year for daily help in the mornings and evenings. These expenses add up quickly and can cost even more in some parts of the country.

So, what's the plan? You can self-fund, invest in long-term care insurance, or explore hybrid life insurance policies with long-term care riders. The key is to have a strategy before you need it. Otherwise, you could drain your savings to cover basic care.

Costs and Uncertainty

Healthcare costs aren't going down. In fact, healthcare costs tend to rise faster than the general rate of inflation. So not only do your regular living expenses rise in retirement, but healthcare costs may increase even faster.

For most people, it's easy to get overwhelmed when thinking about the potential costs. After all, no one can precisely know their future needs. That said, you can't control everything, but you can do your best to prepare.

This week, we aim to introduce you to the key concepts needed to create a flexible plan to handle whatever comes your way.

The Takeaway

Healthcare in retirement isn't something you can't leave to chance - it's likely one of the most significant financial challenges you'll face. Still, it doesn't have to be overwhelming.

While you can't plan for every bump in the road, you can have a strategy in place that makes the journey smoother.

Let's get started!