Prepare for a Major Retirement Expense: Healthcare
By David Brooks, Founder & President of Retire SMART
Retirees need to know their options when it comes to healthcare expenses. The average 65-year-old couple retiring today will need more than $300,000 to cover healthcare expenses. Healthcare ranks right behind taxes as the #2 expense in retirement.
It’s normal for inflation to drive up healthcare costs, but that negative impact has been multiplied by the unusual surge of inflation America has experienced in recent years. The surge of inflation has eased, but the inflationary impact remains and must be factored into a successful retirement plan.
The good news is that Medicare generally pays a major share of healthcare costs. The bad news is that even with Medicare, there will be significant out-of-pocket expenses for most retirees. The goal of the financial advisor is to minimize those out-of-pocket costs.
There are strategies to do this, but you must be proactive. The right moves must be made at the right time, and a variety of strategies must be considered.
For example, a Health Savings Account is the only triple-tax-free account in America.
- Your initial contribution is tax-deductible.
- The contribution grows tax-deferred.
- If you withdraw funds in retirement for a qualified healthcare expense, the withdrawal is 100% tax-free.
It is unfortunate that so many people fail to take advantage of the HSA. Often it’s because they simply don’t know about it.
That’s why we offer a class called the ABC’s of Medicare as part of our annual rotation of more than 80 classes and workshops. We offer the ABC’s of Medicare, and all of our classes/workshops, to the general public as well as clients. No charge. No obligation.
We do it because there are many moving parts to Medicare, to healthcare in general, and to a successful overall retirement plan. It is vital that all Americans educate themselves on the options and strategies available to them.
Whether it’s Retire SMART or another firm, you would be wise to get competent professional advice to help you navigate the sometimes perilous channels of healthcare funding.
