Health, Meet WealthPosted by Medicare Made Clear
Life expectancy is on the rise. Today, a 65-year-old man may expect to live to 84, and a 65-year-old woman to 86. One in every four 65-year-olds could live past 90. (Source: Social Security Administration, 2012)
Twenty-plus years of retirement may sound great, but it may also bring worries about finances.
As of 2010, 44% of households headed by 50- to 59-year-olds could be short of the retirement income needed to maintain their standard of living—even after working to age 65 and tapping into reverse home mortgages. The same is true for 55% of households headed by 40- to 49-year-olds and 62% of households headed by 30- to 39-year-olds. (Source: National Retirement Risk Index, 2012)
Out-of-pocket health care costs, in particular, may come as a surprise in retirement. The 2013 Medicare Made Clear Index showed that 35% of current Medicare beneficiaries surveyed found out-of-pocket Medicare costs to be more than they expected to.
If you are already retired, it’s important to have a solid financial plan that makes the most of your savings and other assets. You may want to work with a financial planner or another resource to help you manage your accounts.
If you are still working, you can take steps now that may help set you up for a financially successful retirement. Here are some ideas.
Open a Health Savings Account (HSA), if available. These pre-tax dollars may be used to cover qualified health care expenses. Unused amounts remain in your account and may be used to pay health care expenses in retirement.
Make retirement savings a priority. Make catch-up IRA and other investments if you qualify and can afford it. You may want to consult a financial advisor to help you create a savings plan that includes all your assets. Also, ask about long-term care insurance.
Consider working longer. Every year that you continue working is a year you may be able to add to, rather than spend, your savings. In addition, your Social Security payments increase the longer you wait to start drawing them. You receive the maximum monthly amount when you wait to age 70.
Explore private health insurance options, if applicable. You may need to buy coverage if you decide to retire before you’re eligible for Medicare at age 65. You may be eligible for COBRA or you may buy insurance through your state or the federal exchange. You should understand the costs of these options.
Learn about Medicare. You have choices to make when you enroll in Medicare, and you will likely have out-of-pocket costs. For many, this is the first experience buying health care insurance. Become a savvy shopper and be prepared.
For more information, explore MedicareMadeClear.com or contact the Medicare helpline 24 hours a day, seven days a week at 1-800-MEDICARE (1-800-633-4227), TTY 1-877-486-2048.
Getting Started With Medicare: Get this information guide that explains the basics of Medicare Parts A, B, C and D.
Medicare & You: Get the U.S. government’s official Medicare handbook.