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4 Financial Planning Tips for Post-Retirement Health Expenses

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The topic of savings and expenses becomes heavily-discussed as more and more adults reach retirement age and no longer can rely on a steady income. There are many areas that seniors need to have plans in place for post-retirement, including living expenses, daily costs, gifts, vacations, and—most importantly—healthcare.

 

While Medicare will help out with covering some healthcare costs, there are still a lot of important healthcare expenses that come directly out-of-pocket. It’s important to seriously consider the care costs you will likely encounter as you age, and make plans for how you will pay for these needs. Here are four tips for how you can approach financial planning for post-retirement healthcare expenses. 

 

1. Learn What Medicare Doesn’t Cover

 

Medicare, or federal health insurance for those 65 and over, is the main way that seniors plan to take care of medical expenses after retirement. Medicare covers many things including hospital visits, general medical insurance, and some prescription drugs, but it doesn’t cover everything. In fact, some major medical expenses that most—if not all—seniors need aren’t even partially covered under basic Medicare plans, which can lead to problems for seniors who don’t have another plan in place. 

 

Dental

Having good dental health and receiving dental care is incredibly important to ensure that your retirement years aren’t spent in pain. However, Medicare doesn’t cover routine or complex dental procedures—causing many seniors to make the mistake of skipping out on dental care altogether.

 

Vision

While Medicare does cover the cost of eye disease and injury treatments, it doesn’t cover routine vision care like annual appointments and eyeglasses, all of which can lead to major out-of-pocket expenses.

 

Hearing

Common hearing treatments that seniors often need as they age, like hearing aids, are not covered through Medicare. A good pair of hearing aids can help you stay communicative and social as you age, as well as significantly reduce your chances of developing memory diseases, but paying for them yourself can be expensive. 

 

Long-Term Care

Medicare will only pay for long-term care housing like a nursing home if it is directly related to the recovery of a specific medical procedure. It won’t cover activities of daily living or instrumental activities of daily living, which many seniors need as they age. Examples of necessary care services not covered under Medicare include:

  • Eating
  • Bathing and personal care
  • Toileting
  • Money and financial management
  • Medication distribution and management
  • House maintenance and cleaning
  • Moving to a wheelchair or in and out of bed

 

2. Know Your Family History

 

You can try and predict what medical expenses you might need to plan for by taking a close look at your family’s medical history. If you see patterns or know that certain diseases and medical problems have affected your family in the past, you can take the necessary steps to address paying for those concerns should you have them as well.

 

It’s also a good idea to examine your own life choices and see if there are any habits or behaviors—such as smoking—that might contribute to a significant medical care expense after you hit retirement age.

 

3. Explore Medicare Advantage Plans

 

While Original Medicare, or Medicare Parts A & B, don’t cover any of the areas mentioned above, there is a chance that a Medicare Advantage Plan might pick up some of the slack for important vision, dental, and hearing medical expenses.

 

There are lots of different types of Medicare Advantage plans, such as:

  • Health Maintenance Organizations
  • Preferred Provider Organizations
  • Private Fee-for-Service Plans
  • Special Needs Plans
  • Medicare Medical Savings Account Plans

 

Each type of Advantage plan has different associated costs and coverages, so it’s important to explore the different options and find a plan that meets your care needs while being affordable within your healthcare budget. 

 

4. Start Planning & Budgeting Now

 

Every day that you wait to make a plan for unexpected healthcare costs is a day where you might might not have enough savings. It’s important to take action today to plan for your important medical expenses and start creating a budget and looking into different funding options for senior health expenses. 

 

You can speak with a financial advisor or go through your finances yourself to see where your spending can be cut and put into a retirement fund or health savings account. If you are already retired, think about ways you can save money and reduce daily costs to plan for healthcare expenses in the future.


Finally, while it’s not fun to think about, the reality is that 70% of seniors will need long term care and those odds include you. Start exploring options like assisted living today so you can have a plan already in place when the time comes to make the move to a senior care community.

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