There are a lot of things to consider before you retire. One thing that some people forget to plan for, however, is their health care in retirement. Many people assume that Medicare will cover all their health care expenses once they retire. The reality is that it doesn’t.

According to Fidelity, the average retired couple typically has to pay $260,000 on health care expenses.1 That figure includes things like copays, deductibles, premiums and more. By planning ahead, you can help to avoid draining your retirement funds to pay for health care expenses. Act now to develop a sound health care funding strategy, and you can save your retirement money for things you want to do rather than spend it on health care expenses.

Fund your HSA.

Funding an HSA, or health savings account, is one way to plan for health care expenses in retirement. An HSA allows you to make tax-deductible contributions and grow your funds on a tax-deferred basis. As long as the money is used for health care costs, an HSA also allows you to take tax-free withdrawals.

In 2016, individuals can contribute $3,350 to their HSA. If, however, you are over the age of 55, you are allowed to contribute slightly more. These catch-up contributions allow you to add an additional $1,000 to your HSA.2 If you’re getting close to retirement, catch-up contributions to an HSA can be a good way to cover medical-related expenses in a tax-advantaged manner.

Consider long-term care insurance.
Again, Fidelity estimates that the average 65-year-old couple will pay $260,000 out of pocket on health care in retirement. However, that figure does not include long-term care. Long-term care is extended support with basic living activities, like dressing and bathing. The U.S. Department of Health and Human Services estimates that 70 percent of current 65-year-olds will need some form of LTC.3 It also estimates that 20 percent of 65-year-olds will need LTC for more than four years.4

One way to help pay the costs of LTC is with long-term care insurance (LTCI). These policies typically involve you paying premiums today for coverage later. Depending on the terms of your policy, the insurance company may pay for some or all of your long-term care costs. Also, many LTCI policies cover care in a facility and care in the home, so you could use the policy to help you stay in your residence.

Take care of your health.
One of the easiest ways to avoid health care costs in retirement is simply to take care of your health. Since you’ll have more time to do things, you can consider exercising more. And it doesn’t have to be strenuous activity. Things like gardening and walking are great ways to keep in shape. Eating healthier is another good way to minimize your chances of injury or illness. It might also be a good idea to get treated for any issues you have now while you still have health insurance.

Ready to develop your health care funding strategy? Contact us at MasterPlan Retirement Consultants. We can help you evaluate your objectives and needs, and then develop a strategy. Let’s connect soon and start the conversation.


This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
Investment advisory services offered through MasterPlan Retirement Consultants, Inc. a Registered Investment Advisor in the state of Georgia. Insurance products & services offered through Fricks and Associates, Inc. MasterPlan Retirement Consultants, Inc. & Fricks and Associates, Inc are affiliated companies.

MasterPlan Retirement Consultants, Inc. & Fricks and Associates, Inc are not affiliated with or endorsed by the Social Security Administration or any government agency.
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