Is Medicare enough in retirement?
No. It is a great foundation, but not enough. It is important to have money saved for the supplemental healthcare expenses not covered by Medicare in retirement.
If you should need long-term care, you don’t want to have to choose between the scant options Medicaid will pay for.
There are many ways to build up the nest egg that might be needed for healthcare in retirement. You can buy insurance. Or, if you save and invest wisely (working with a financial planner helps), you can self-insure: the money will be there if/when you need it. You can rollover money in your Health Savings Account (HSA) accumulated during the years you are working. The money you set aside in an HSA is not taxed. It can often be invested like a 401K. As it accumulates, it can be enough to pay for incidentals.
What you need for healthcare in retirement depends on how you live now
If you prioritize a wellness lifestyle now, your money will go further in retirement. Taking care of ourselves mentally, physically and socially is important at every stage of life. Having friends outside of work, a faith practice, involvement in community or cultural activities all contribute to wellness.
Being isolated socially, particularly in retirement, has the equivalent impact of smoking 15 cigarettes a day.
Planning for what you will do when you retire is key to health in retirement. Setting goals around activities that will keep you engaged in life--such as biking, yoga, reading, writing a book—will help you stay healthy in retirement so you can live a full life as long as possible. It is also important to go deeper into the interests you have now.
Plan financially for retirement as well. Working with a financial planner can help you figure out how long you will probably live from a mortality standpoint and how much money you will need to maintain your desired lifestyle in retirement.
Planning now will prevent surprises later.
Healthcare in retirement for FIRE people
People following the FIRE plan (Financial Independence, Retire Early) obviously cannot get Medicare in their ’30s, ’40s or ’50s. They can pay for healthcare themselves (expensive) or use the Affordable Care Act (also called Obamacare).
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This content is developed from sources believed to be providing accurate information and provided by Kelly Financial Planning. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.
