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Healthcare and Financial Planning for your Retirement – Have you really thought through this?

The amount you should budget for health care in retirement depends on several factors, including your current health status, family health history, lifestyle choices, and where you live. According to the Employee Benefit Research Institute's Retirement Confidence Survey, a 65-year-old couple retiring in 2021 can expect to spend around $300,000 on healthcare expenses in retirement, including premiums, deductibles, and out-of-pocket costs for Medicare and supplemental insurance.

It's important to note that this is just an estimate, and your actual healthcare costs in retirement may be higher or lower depending on your individual circumstances. To get a better idea of how much you should budget for healthcare in retirement, you may want to consult with a financial planner or healthcare specialist who can help you assess your specific needs and expenses. Additionally, you may want to consider factors such as long-term care insurance, which can provide additional coverage for potential health care costs.

The Significance of Healthcare and Retirement

Healthcare costs after retiring but before age 65 can be a significant financial challenge for many people, as Medicare coverage typically doesn't start until age 65. Here are some options to consider:

  1. COBRA coverage: If you retire from a job that provides health insurance, you may be eligible for COBRA coverage, which allows you to continue your employer-sponsored health insurance for a limited time (usually up to 18 months) after leaving your job. However, keep in mind that you'll be responsible for paying the full cost of the premiums, which can be expensive.

  2. Private health insurance: You can purchase health insurance on the private market through the Health Insurance Marketplace or directly from insurance companies. These plans can be expensive, but you may be eligible for subsidies to help lower the cost based on your income.

  3. Retirement health insurance: Some employers offer retiree health insurance plans that can bridge the gap until you're eligible for Medicare. Check with your employer to see if this is an option.

  4. Health savings account (HSA): If you have a high-deductible health plan, you may be eligible to contribute to an HSA, which allows you to save money tax-free for healthcare expenses. You can use these funds to pay for eligible healthcare expenses before you're eligible for Medicare.

  5. Consider working part-time: If you're able and willing to work part-time during this period, you may be able to access health insurance through an employer or a spouse's employer.

Overall, healthcare costs before age 65 can be a significant expense, but there are options available to help you manage these costs. It's important to plan ahead and explore your options to find the best solution for your needs and budget.

Medicare and Health costs

Healthcare costs during your Medicare years will depend on a variety of factors, including your health status, the type of Medicare coverage you choose, and the specific services you require. Here are some key factors to consider:

  1. Medicare premiums: Most people are eligible for premium-free Medicare Part A, which covers hospital stays, skilled nursing facility care, and some home health care services. However, you will need to pay premiums for Medicare Part B, which covers doctor visits and outpatient services. The standard Part B premium is $170.10 per month in 2022, but it may be higher depending on your income.

  2. Deductibles and coinsurance: You'll also be responsible for deductibles and coinsurance for certain services under Medicare. For example, in 2022, the Part A deductible for hospital stays is $1,548 per benefit period, and the Part B deductible is $233 per year. You'll also be responsible for coinsurance amounts for some services, which is typically 20% of the Medicare-approved amount.

  3. Medicare Advantage plans: You may choose to enroll in a Medicare Advantage plan, which is offered by private insurance companies and provides additional benefits beyond original Medicare. These plans may have lower out-of-pocket costs for certain services, but you'll need to pay the plan's premiums and follow its rules and restrictions.

  4. Prescription drug coverage: You can enroll in a Medicare Part D plan to help cover the cost of prescription drugs. These plans are offered by private insurance companies, and premiums, deductibles, and copayments will vary depending on the plan you choose.

  5. Medigap policies: If you choose original Medicare, you may want to consider a Medigap policy to help cover the out-of-pocket costs you'll incur. These policies are also offered by private insurance companies and can help cover deductibles, coinsurance, and other costs.

Medicare can help provide important healthcare coverage for seniors, but it's important to understand the costs and options available to you. Be sure to review your options carefully each year during the annual enrollment period to ensure you have the coverage that meets your needs and budget.

Long – Term Care Costs

Long-term care costs can be a significant financial burden for many individuals and families, especially as they age. Here are some key factors to consider:

  1. Type of care: Long-term care can take many forms, from in-home care to assisted living facilities to nursing homes. The type of care you need will depend on your health status and needs.

  2. Cost of care: The cost of long-term care can vary widely depending on the type of care you need and where you live. According to the Genworth Cost of Care Survey 2021, the national median cost of a private room in a nursing home is $109,500 per year, while the median cost of a home health aide is $54,912 per year.

  3. Medicare coverage: Medicare may provide some coverage for short-term nursing home stays or home health care services, but it generally doesn't cover long-term care costs. Medicaid may provide coverage for long-term care for eligible individuals, but eligibility requirements vary by state.

  4. Long-term care insurance: Long-term care insurance can help cover the cost of long-term care services, but premiums can be expensive and coverage options may be limited. It's important to consider the cost of the premiums, the coverage limits, and any restrictions or exclusions when deciding whether to purchase long-term care insurance.

  5. Self-funding: If you have significant assets, you may choose to self-fund your long-term care costs. This can be a viable option for some individuals, but it's important to carefully consider the potential impact on your overall financial plan.

Overall, long-term care costs can be a complex and challenging issue to navigate. It's important to plan ahead and explore your options to determine the best approach for your needs and budget. Consulting with a financial planner or elder law attorney can be helpful in assessing your specific situation and identifying strategies to help manage long-term care costs.

To learn more about Evolve Wealth Advisors, please visit our website at Should you have any questions regarding your account or how Evolve Wealth Advisors can help with your future Estate or Retirement planning needs, please contact Peter Henry, CEO at 818-970-6940 or Patrick Kinney, COO at 503-490-0273.


This commentary is provided for general information purposes only and should not be construed as investment, tax or legal advice, and does not constitute an attorney/client relationship.

The market commentary appearing above has been prepared by personnel of and for Evolve Wealth Advisors, LP. The information contained within the commentary is provided as general market commentary only and does not constitute any form of regulated financial advice, legal, tax, or other regulated financial service. It is not considered to be investment research or a research recommendation, as it does not constitute substantive research or analysis. Any charts or graphs do not reflect past or current recommendations by Evolve Wealth Advisors and should be considered an academic treatment of empirical data. Investors should consult their financial advisor when applying the assumptions of any chart or graph.

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