Rx for retirement woes


One of the most common oversights in retirement savings is forgetting to plan for the cost of health care in your golden years.

Big mistake, since health care costs continue to go up year in and year out.

 

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Fidelity released a study that suggests a couple retiring at 65 this year can expect to pay $260,000 on health care throughout retirement.

The culprit: The rising cost of prescription drugs.

 

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Medicare

The Fidelity number assumes couples live an average lifespan and have enrolled in the basic Medicare coverage plan.

It also doesn’t factor in the cost of long-term custodial care in the event of a prolonged illness.

There are many treatment costs that standard Medicare plans won’t cover, according to Fidelity.

 

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Smart Options

There are ways to mitigate the cost of healthcare in retirement, according to financial advisers.

Consider enrolling in Medicare Advantage plans offered by private insurers to cover more benefits and lower out-of-pocket costs.

Another option is delaying your retirement date to age 70 to extend your corporate health insurance coverage.

As Bloomberg noted in recent article:

“By waiting until they’re 70 to take Social Security benefits, retirees reap bigger benefits—76 percent higher than if they had taken them at age 62.”

 

Finally, some employers offer health care savings accounts that allow you to save for future needs with pre-tax money.

 

Takeaway

In my opinion, retirement savers who fail to do the math on future health care costs are asking for trouble.

With a little planning, you can enjoy your retirement years without worrying about an unexpected hit to your savings.

 

Photo Credit: (401k)  2012 via Flickr Creative Commons

 

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Xavier Brenner
Xavier Brenner
Xavier Brenner has covered global market, business and economic trends for Interactive Brokers Asset Management since 2013. An experienced financial journalist, Brenner offers analysis and insights on the stories that matter to the discerning investor.