Keep healthcare in mind when planning your retirement
If you're anything like most Americans, healthcare costs can be a big concern when you're planning for retirement. That's why it's essential to keep them in mind as you're getting ready for your golden years.
One common error we notice is people assuming their healthcare expenses will be covered by Medicare in retirement. The truth is, a single 65-year-old could need approximately $157,500 saved after tax to cover health care expenses in retirement, according to a report by Fidelity. And that number jumps to $315,000 for an average retired couple age 65.1
Those figures hinge on various factors such as your work duration, retirement timing and location, health condition, and life expectancy. Nonetheless, it could serve as a valuable target to strive towards.
Another common pitfall we notice is the consistent underestimation of the need and the costs associated with long-term care. Although the extent of long-term care required varies for everyone, data from the Administration on Aging paints a striking picture: at least 70% of individuals aged 65 or older today will inevitably find themselves in need of some level of care.
Every year, Americans are shelling out a whopping $475.1 billion for long-term care. Surprisingly, Medicaid only covers 42% of these costs. This means you'll probably be responsible for a significant portion of the bill, making it crucial to plan ahead.
Another important thing to note is Ohio's latest updates regarding Medicaid planning. Under the new rule, underlying retirement accounts can now be exempted and kept by the owner under certain conditions, but the income will be countable.
While you're mapping out your healthcare expenses for retirement, regardless of its duration, it's crucial to consider how covering future healthcare costs aligns with your broader retirement income plans and further. Remember, healthcare needs typically rise as we get older.
The bottom line: There's a ton to think about when planning for retirement. Getting ahead of it isn't just smart, it'll probably save you time and money down the road. And one way to help work on getting you ahead is to work with our team of financial professionals who can help coordinate all your financial needs. If you have questions, give us a call today. We’re here to help!
Source:
1: fidelity.com/viewpoints/personal-finance/plan-for-rising-health-care-costs
2: https://www.aplaceformom.com/caregiver-resources/articles/long-term-care-statistics
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