Health Care and Retirement Planning: Health and Wealth are Closely Linked for Older Americans

By Megan Morrow
Published September 30, 2019

If you are part of a healthy 65-year-old couple planning to retire in 2019, you and your partner will pay close to $400,000 in health-care expenses, according to a recent HealthView Services report. In the first year of retirement alone, healthcare premiums and out-of-pocket payments will exceed $12,000 on average – and these expenses (not including the significant costs of long-term care) will reach more than $35,000 in the next two decades. The price tag is even higher for younger couples, who will pay more due to the compounding effect of inflation.

A little math quickly reveals the importance of health care as a key component of retirement planning. Your health may truly be your wealth.

New retirees often report being surprised by steep healthcare costs. If you have not given ample consideration to health care as a retiree, there is no time like the present to get started on these conversations and computations. Keep the following tips in mind for a healthier, well-planned retirement:

  • Take charge of any chronic conditions now. According to the National Health Council, about 40 percent of the U.S. population struggles with a chronic condition such as diabetes, obesity, high blood pressure and more, and many fail to follow prescribed advice for managing or eliminating the condition. If you address chronic conditions now by increasing exercise or cutting back on salt, for example, you can save on medical costs while enjoying the benefits of better health. Even if you are generally healthy, taking simple steps to support your health now and into the future is wise – increase your daily steps, try new healthy recipes and take a few deep breaths each day.
  • Look into a health savings account. With the triple bonus of pre-tax contributions, non-taxed gains and health-related withdrawals that do not count toward your taxable income, these can be a great vehicle for saving and covering any expected or unexpected medical costs. If you are not currently taking advantage of this option at work, consider opening one at the next opportunity.
  • Keep contributing to your financial future. If you have concerns about health care, you can talk with your advisor about your current retirement plans and contributions. Likewise, if you can increase your ongoing contributions to 401(k) or other retirement plans, you will help support your health in the future.

More than 70 percent of adults who have not yet retired noted that “paying for health care” was their top concern, adding to general concerns about financial and retirement planning. The more you prepare now, the more prepared you will be to manage healthcare costs as a retiree.

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The material presented here is for information purposes only and is not to be considered an offer to buy or sell any security. This report was prepared from sources believed to be reliable but it is not guaranteed as to accuracy and it is not a complete summary of statement of all available data. Information and opinions are current up to the date of publication and are subject to change without notice. The purchase and sale of securities should be conducted on an individual basis considering the risk tolerance and investment objective of each investor and with the advice and counsel of a professional advisor. The opinions expressed by Ms. Morrow are strictly her own and do not necessarily reflect those of Herbert J. Sims & Co., Inc. or their affiliates. This is not a solicitation to buy or an offer to sell any particular investment. All investment involves risk and may result in a loss of principal. Investors should carefully consider their own circumstances before making any investment decision.

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