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Factoring Health Care Costs into Your Retirement

If you’re contemplating and planning for retirement, there is much to consider. The basics come to mind first, housing, food, transportation, travel to “bucket list” locales, gifts for the grandkids and – last but certainly not least – health care.
You may want to move health care to the top of that list. A study released earlier this year found that an average married couple, both aged 65, will need $280,000 to cover health care and medical costs in retirement. While that is up only two percent from last year’s estimate of $275,000, it’s still a large figure, reinforcing the fact that Medicare is neither free nor comprehensive.

The study assumes a couple both 65 are on the original Medicare, not a private Medicare Advantage plan. Its $280,000 estimate includes premiums for Part B doctor coverage and Part D drug coverage, as well as out-of-pocket costs such as deductibles and cost-sharing requirements for drugs. It also includes certain services and devices that Medicare doesn’t cover, such as hearing aids, and assumes lifespans of 87 for a man and 89 for a woman. Importantly, that estimate does not include the cost of long-term care (such as home health aides or assisted living.) You may not realize that Medicare doesn’t pay for this type of custodial care, which can add up – fast.

If you’re single and retire before you’re 65, you might end up paying a premium of up to $1,000 a month, at today’s rates. If you’ve reached 65 and are eligible for Medicare, it could still set you back up to $300 a month.

So, what’s the best way to prepare for health costs in retirement? Be proactive! If you’re within five years of walking away from work, start researching and ask yourself some questions. How will you get your insurance when you’re retired? What are the current rates for the option you choose? How will those costs fit into your projected budget? Arizona State employees who have earned enough points to retire early or at 65, receive medical coverage through Arizona State Retirement up to the age of 65, but you may still want additional coverage such as hospital indemnity, critical illness or other supplemental coverage at an additional cost. It is always a good idea to consult a financial and benefit advisor well in advance of your ideal retirement date to plan appropriately and leverage all savings opportunities available to you for retirement.

Valley Schools wants to make sure you are not caught off guard when you retire. We work hand-in-hand with our members to help guide and educate. We are passionate about serving our members! Contact us today to become a member at no cost, and learn more about how we can help you manage your employee benefits to save money and plan for a strong, healthy retirement.

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