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CALL US: (888) 440-2468

have an annuity question?
have an annuity question?

Managing healthcare costs in retirement

According to a recent study, an average retired couple that is age 65 (in 2021) may need roughly $300,000 saved – after tax – to cover healthcare expenses for the remainder of their lifetimes – and this figure does not include the cost of a long-term care need. On average, the monthly cost of a private room in a skilled nursing facility was more than $8,800 in 2020. A semi-private room only brought the cost down to an average of $7,756 per month. If you’re married, and both you and your spouse need long-term care, these expenses can easily run into the five figures every month. Even with Medicare coverage, there could still be significant cost responsibilities like deductibles, copayments, and/or coinsurance costs – and this program pays very little for long-term care. With all of this in mind, have you factored a way to pay these costs into your retirement plan?

Preparing for Future Healthcare Expenses

In order to manage your future healthcare costs, it can help to coordinate various insurance coverage options with your income generators. For example, it is estimated that roughly one-third of those who retire before their Social Security “full retirement age” do so to help with paying their healthcare expenses until they are eligible for Medicare coverage at age 65.

Social Security Full Retirement Age

Year of BirthMinimum Retirement Age for Full Benefits
1937 or Before65
193865 + 2 months
193965 + 4 months
194065 + 6 months
194165 + 8 months
194265 + 10 months
1943 to 195466
195566 + 2 months
195666 + 4 months
195766 + 6 months
195866 + 8 months
195966 + 10 months
1960 or Later67

However, if it is possible for you to postpone your retirement and/or to save enough money to help with covering your healthcare needs until you have reached age 65, you may be able to also wait on claiming Social Security – which in turn, will give you a larger dollar amount of benefit each month. If you do not have access to Medicare, there could be other health insurance options available, such as:
  •  Public marketplace plan
  •  Spouse’s employer-sponsored health insurance plan
  •  Private health insurance policy
If you own – or plan to purchase – an annuity to supplement your retirement income, you may be able to access some of the funds in the account penalty-free for various health-related needs. For instance, many annuities include a waiver of surrender charges (even during the surrender charge period) if the owner has been diagnosed with a terminal illness and/or requires long-term care for at least a certain amount of time.

Coordinating Healthcare Payment Options and Retirement Income Sources

It is estimated that the percentage of household budgets spent on healthcare expenses is almost three times as much for retirees who are on Medicare than they are for those who are in working households. In this case, 14% versus 5%. Because all situations are different, though, there isn’t just one single plan that will work for everyone across the board. So, before you commit to any type of strategy, it is recommended that you talk with a retirement income specialist. At Annuity Gator, we help people to better understand their income options in retirement and can provide you with information on how to coordinate these with the healthcare coverage alternatives that you have. So, if you would like to set up a time for a no-cost, no-obligation talk with an Annuity Gator specialist, feel free to contact us at (888) 440-2468 or send us an email by going to our secure online contact form. We look forward to meeting you. Managing healthcare costs in retirement

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