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Offbeat How to shockproof your retirement health care costs

18:08  11 july  2018
18:08  11 july  2018 Source:   reuters.com

This was the average American's 401(k) balance last year. How do you compare?

  This was the average American's 401(k) balance last year. How do you compare? Are you saving as much as the typical American?Now these limits do represent an increase from the previous year, but given these figures, you'd think we'd be seeing some pretty strong numbers as far as 401(k) balances are concerned. New data from Vanguard, however, tells us that the average 401(k) balance among their participants was $103,866 last year.

While most retirement healthcare research focuses on broad lifetime numbers, like Fidelity's The greatest shocks will occur if people need long-term nursing care at over ,000 a year “You will never get the money figured out on the nose.” How to shockproof your retirement healthcare costs .

Health - care costs for retirees have climbed to 5,000 — not including expenses not covered by Medicare, such as dental, basic vision, over-the-counter medicines and long-term care . Here are a few steps you can take to mitigate those costs .

Financial planner David Haas' client was traumatized in the dentist chair, but it was not the drill that scared her.

It was the dentist’s bad news: The woman needed thousands of dollars in dental work, and she had never imagined such expenses when she retired a few months earlier. “What if it happens over and over again? Will I run out of money?” she asked Haas, her Franklin Lakes, New Jersey financial planner.

Haas assured her they had added up all her living expenses before she retired at 65, and she would be fine even if she lived to 95.

Other retirees are not as fortunate, however, and they fear a medical shock will drain their savings. In a national survey by Brightwork Partners, four in five baby boomers said they worry but they are too confused to plan for medical costs.

How can I simplify my retirement investments?

  How can I simplify my retirement investments? It's no surprise to me that you'd want to streamline your investment approach. After all, retirement is a time when you want to enjoy life, whether that means pursuing new interests, savoring the extra free time you have after calling it a career or both.It's no surprise to me that you'd want to streamline your investment approach. After all, retirement is a time when you want to enjoy life, whether that means pursuing new interests, savoring the extra free time you have after calling it a career or both.

Health care may be one of the largest expenses in your retirement budget. Also think through advanced care planning, establish a health care proxy and get legal and financial forms in place. “These help you determine beforehand how to proceed and will save you time and money,” Snyder

How do you account for health care costs in your retirement planning? If you're like most, you are underestimating these expenses. And, over time, premiums and out-of-pocket costs will go up. People Forget About Health Care Costs . Many retirees and people getting ready to transition out of

Tools are on the way. While most retirement healthcare research focuses on broad lifetime numbers, like Fidelity's recent estimate that a couple will spend $280,000 on healthcare costs in retirement, a new study by Mercer Health and Benefits and Vanguard Research broke it down more specifically.

The goal is to develop a model pre-retirees can use to estimate healthcare spending on an annual basis to allow for basic budgeting. That can help set savings goals and also give people time to delay retirement if needed. Then they can be more prepared for that unexpected $1,500 dental crown.

MAKE A BUDGET

The researchers found that the average 65-year-old woman retiring on Medicare in 2018 will start out spending $5,200 in a year to pay for medical expenses -- including Medicare, additional health insurance, and out-of-pocket costs that are not covered by insurance.

3 Reasons to Claim Social Security Early

  3 Reasons to Claim Social Security Early Even though it results in a lower benefit, claiming early can make sense in some circumstances.While claiming Social Security early isn't a good idea for everyone, there are certainly some scenarios where it makes good financial sense. Here are three specific reasons why claiming your Social Security retirement benefits early could be a smart move for you.

Health care costs are one of the biggest expenses during retirement . Proactive health insurance planning is necessary to keep your health care costs as low as possible. Here are some health insurance choices you should consider

Health care costs are rising faster than wages. That’s the key finding in a report from the Urban Institute and AARP Public Policy Institute. Learn how your current health conditions will affect your retirement costs . The typical couple with average drug expenses needs approximately 0,000 to

By age 85, the cost jumps to $10,100 per year - or $13,900 for a less healthy person. Older people need more care than people in their 60s, and researchers see healthcare inflation starting at 6.6 percent a year, but trending to 4.5 percent over time.

The researchers came to these numbers by calculating what it costs to be on Medicare, which starts with a monthly fee of $134 a month for Medicare Part B. Then, come extra costs buying Medicare supplemental insurance, or what’s known as Medigap, to pick up doctor and other bills that Medicare does not pay completely. The retiree would also buy drug coverage through Medicare Part D.

Together, all three forms of insurance cost an estimated $3,600 for the year, researchers estimated.

Dental, vision, some drugs and extras like hearing aids are not covered, so that figures into the average $1,600 spent out of pocket.

Cutting out the supplemental insurance cost is often not a cost-saving move. Early retirees with health problems who do that could spend $7,200, according to the Mercer/Vanguard study.

3 reasons to file for Social Security on time

  3 reasons to file for Social Security on time There are good reasons to start collecting your Social Security benefits early or late. But for many people, starting on time is the right move.If you can afford to hold off a little, you may want to start collecting your Social Security benefits not early or late but right on time. Here's a closer look at what "on time" means for you and why it might be your best time to start collecting.

Retirement health cost estimator: Your current health . Some chronic health conditions have a larger impact on medical spending than others. Health care costs tend to rise with age, and health care inflation rates tend to be higher than overall inflation rates.

He can afford to self-insure his health care , but he doesn't. He has Medicare, because it saves him a tremendous amount of money. Q. Let's take an example of an older married couple, in their early sixties, on employer-sponsored health care insurance. How should they be thinking about Medicare?

PREPARE FOR SHOCKS

Before retiring, Vanguard Retirement Strategist Maria Bruno suggested people quiz themselves about their health. If they have conditions such as diabetes, arthritis, heart disease or cancer, they are higher risk and spending will likely be more than the $5,200 per year at age 65.

The greatest shocks will occur if people need long-term nursing care at over $90,000 a year, but the researchers found only one in seven will face those costs for two years or more.

People may have a family member who can help with care and hold down the cost, said doctor and financial planner Carolyn McClanahan, of Jacksonville, Florida.

Rather than panicking over possible costs in advance, McClanahan has clients think ahead about lifestyle issues that could affect expenses. For example, as they age they could move close to a family member who could help with care, or they could sell a home and use the proceeds to cover assisted living or a nursing home.

And always have an emergency fund. McClanahan has clients budget $10,000 to $20,000 a year for all unforeseen costs for the home or health.

One way to amass a healthcare emergency fund if a person is still working is to pick health insurance with a high deductible. Such plans often let people put up to $6,900 a year into a Health Savings Account that can be saved until needed for retirement and is not taxed.

A one-year health shock often is not repeated, but expect the unexpected.

“You can’t predict 30 years; not even 10,” McClanahan said. “You will never get the money figured out on the nose.”

Medical costs in retirement are projected to be average of $200K. Are you prepared? .
How much will retirees incur in out-of-pocket medical costs? The usual assumption is to plan on spending at least $100,000 or so throughout retirementLoad Error

usr: 1
This is interesting!