A major part of planning for retirement is creating a financial budget. As you won’t be making a salary anymore, it’s crucial to be careful and aware of how you’re spending your pension and social security.
One of the major expenses that retirees have are healthcare expenses. On average, a retired person spends about $300,000 on healthcare during their retirement. Unfortunately, many people planning to retire don’t necessarily plan for such expenses and can find themselves in financial trouble.
As you plan for retirement, consider the following factors when budgeting for your healthcare.
Current Health Conditions
If you have any current health conditions that will require treatment in the future, you’ll want to factor in these expenses to your healthcare budget. If you have heart disease, high cholesterol, or diabetes, add these medications and treatments to your monthly budget.
Also, consider your family history of conditions and any that you may need to plan for in the future.
Review Medicare Coverage
When you turn 65, you are eligible for Medicare health insurance provided by the government. The annual deductible for hospital stays in 2022 is $1,556, so you will have to ensure you can afford this for yourself and your partner if necessary.
You will also want to examine what services and treatments your Medicare will cover. For example, it does not cover dental and vision. In some instances, you may not have certain surgeries covered. So, maybe you’ll have to find alternatives to back surgery that you need that will be covered instead.
Plan Alternative Ways to Pay for Healthcare
If your Medicare does not cover some treatments or medications, then you must find alternative ways to pay for them where you don’t rely on your insurance.
One way to do this is through a Health Savings Account (HAS). This bank account is a way to set aside money to use just for healthcare and medical expenses. What’s even better is that it is tax-deductible, and you can withdraw it tax-free! It’s a great way to help you budget and separate your money solely for your healthcare.
Another alternative is to look into supplemental health insurance. More specifically, search for long-term insurance that can help you take care of yourself for a few years if necessary. Unfortunately, Medicare does not offer coverage for long-term care, which can be life-saving if your health requires it.