Planning for your retirement is all about being financially secure. However, some factors such as the cost of healthcare are often overlooked or underestimated when it comes to retirement planning.
You’re probably thinking that you have nothing to worry about because Medicare will cover all your healthcare costs. Nothing could be further from the truth. Medicare only pays for very specific healthcare services. That leaves many expenses – hearing aids, glasses, dental work – as uninsured medical expenses.
So what should you do?
First, determine how much money you will need when you retire to cover you medical costs. Naturally, it will depend on when you retire, how long you live, your health status and the cost of medical care in your area.
Next, consider if you want Original Medicare (Parts A and B) and prescription coverage (Medicare Part D) or an all-inclusive HMO plan under Medicare Part C. If you choose Original Medicare, you may want to add Medicare supplement insurance (known as Medigap Insurance). That is an additional cost you’ll need to account for.
You’ll also need to consider co-pays and deductibles that might be required for whatever Medicare coverage you choose. Keep in mind that the Centers for Medicare & Medicaid Services (CMS) estimates that out-of-pocket healthcare spending will reach a growth rate of 5.5% by 2013 and 8.3% in 2014.
You can help yourself by:
- Learning what Medicare does and doesn’t cover and the associated costs
- Reviewing your present and anticipated medical needs, including family health history
- Determining if you need Medigap insurance and what it will cost
- Considering your need for long-term care
- Saving NOW