There’s no question, medical expenses must be a part of your retirement plan. But how can we proactively manage expenses without a crystal ball showing us what’s ahead? While we can’t be certain of our needs, the data shows planning ahead is the smart thing to do.

A recent study revealed the average retired couple age 65 may need somewhere in the realm of $315,000 saved to cover healthcare expenses in retirement. With this figure in mind, let’s look at:

Resources for Managing Medical Expenses in Retirement
Long-Term Care Planning
The Reality of Planning for Medical Expenses in Retirement

Resources for Managing Medical Expenses in Retirement

First and foremost, it’s important to understand most retirees can’t count on Medicare alone when it comes to healthcare costs. This common misconception leaves seniors across the caught off guard each year by out-of-pocket medical expenses. Minimizing surprises and unforeseen liabilities is an important part of retirement planning.

Here are a few options to consider:

Medicare Part D/Medigap — Supplement Insurance for Seniors

While benefits can drastically differ between policies, it’s important to understand that Medicare Part D, Medigap, and Medicare Supplemental Insurance all refer to obtaining an additional medical insurance policy from a private insurance company.

It’s commonly recognized that Medicare Part D shoppers are often those who regularly take prescription drugs, but these policies also include coverage for dental, vision, hearing, and other healthcare services. It is important to carefully evaluate the options and costs of each plan before making a decision.

Medicare.gov provides many resources that help you understand your needs, review options, and in selecting an insurance provider. Start by reviewing their 4 steps to buy a Medigap policy.

Long-Term Care Planning

Long-term care refers to in-home care, assisted living, and nursing homes, but the care we may require in the future is categorized into skilled and unskilled care. Differentiation is important when it comes to who pays what.

Skilled care is prescribed by a doctor and is often associated with rehabilitation, certain memory care services, and recovery from a specific ailment.

Non-skilled care services and Activities of Daily Living (ADLs) include bathing, dressing, medication management, and meal preparation. These tasks fall under personal care or custodial care. While commonly necessary for aging adults, these needs are categorically different when it comes to any type of policy covering long-term care.

Medicare Part A, hospital insurance, does include skilled care coverage, but the duration of the coverage is limited. If skilled care is specifically prescribed, Medicare will pay for your first 20 days of care. Day 21-100 comes with a daily coinsurance of up to $200. Medicare does not provide any financial support after day 100. At this point, the recipient is liable to pay 100% of the cost.

Long-term care insurance — Provides coverage for expenses related to home health care, nursing homes, and other long-term care services. These policies can bring peace of mind that your future needs are covered, but that peace of mind can come with a hefty price.

Many will choose to prioritize saving for their future medical needs through their retirement plan. For some, the savings and investing they do for retirement is positioned to cover both their day-to-day expense and long-term care needs. Others may choose to especially set aside funds for medical needs through a health savings account (HSA) or flexible spending account (FSA) to save pre-tax dollars for future healthcare expenses.

The Reality of Planning for Medical Expenses in Retirement

Preparing for long-term care expenses while still working is important to ensure financial stability in retirement. Comprehensive retirement planning goes far beyond an investment portfolio paired with Social Security and Medicare. It’s about creating an all-encompassing plan that allows you to proceed into retirement with confidence.

If future medical expenses are weighing on you, reach out. We’re here to help you analyze your needs and assist in building a plan that can alleviate much of the stress associated with uncertainties of our future.

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About Integrated Wealth Management

Integrated Wealth Management is owned by Burt Hutchinson, CPA, CFP®. We’re a CPA-led organization, meaning we’re here to handle your complex tax scenarios and provide cost-saving insight related to your financial plan.

We’re here to guide you through the 3 stages of retirement:

Uncertainty Stage: When you are within 10 years of retirement and have questions about how to make it work
Stability Stage: When you have reached the financial milestone to retire comfortably and confidently
Reflection Stage: When you are looking to leave a legacy

We are also here to provide experienced, empathetic support during times of loss, such as the death of a life partner. You need confidence and a sense of security to enjoy retirement. As fiduciaries with a fee-only structure, we never receive commissions. Free of ulterior motives, you can be sure we’re focused on your goals.

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Disclosure Statement:

This presentation is not an offer or a solicitation to buy or sell securities. The information contained in this presentation has been compiled from third-party sources and is believed to be reliable; however, its accuracy is not guaranteed and should not be relied upon in any way whatsoever. This presentation may not be construed as investment, tax, or legal advice and does not give investment recommendations. Any opinion included in this report constitutes our judgment as of the date of this report and is subject to change without notice.

Additional information, including management fees and expenses, is provided on our Form ADV Part 2 available upon request or at the SEC’s Investment Adviser Public Disclosure website, Past performance is not a guarantee of future results.