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Millions of Americans worry that they won’t be able to save enough for a comfortable retirement. This is a legitimate concern, given the high cost of retiring without financial hardship. Retirees also tend to be hit with “unexpected” expenses that they didn’t save for. One of the biggest unexpected expenses for retirees is medical expenses.
Medicare covers most, but not all, medical costs for people over age 65. While everyone needs to build a nest egg to fund uncovered medical-related expenses in retirement, those with pre-existing medical conditions need to plan especially aggressively.
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How can you financially prepare for retirement if you have health concerns or issues? GOBankingRates spoke to financial experts to find out.
Also see 7 Unexpected Medical Expenses That Can Deplete Your Retirement Savings.
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Max out your health savings account
One of the most powerful weapons to attack health care costs is a health savings account (HSA). This is a type of savings account that allows you to set aside money on a pre-tax basis to pay for qualified medical expenses. HSAs have no mandatory distribution and no expiration date, so they can be used at any time.
“HSAs have three distinct tax benefits: You can make tax-free contributions, you can grow your account tax-free, and you can withdraw funds for qualified medical needs,” says a personal finance expert. said Erika Kulberg, attorney and founder of Erika.com. “This account could be your lifeline in retirement for medical expenses.”
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Add medical expenses to your retirement budget
When creating your retirement budget, it’s important to include both expected and unexpected health-related expenses.
“Estimate your expected medical costs based on your personal health history and taking into account medications, treatments, and potential long-term care,” says Kullberg. “Having a clear understanding of your financial needs can help you adjust your savings and spending plans accordingly. You can also make sure your assets are in place if your health deteriorates, such as by creating a power of attorney or living will. You may also want to consider an estate plan to ensure that your property is well-maintained.
Check disability benefits
If you have any medical conditions that affect your ability to work before you retire, you may want to consider applying for Social Security Disability Insurance (SSDI).
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“SSDI can help provide income while preserving your retirement savings,” said Tyler Meyer, CFP, founder of Retire to Abundance. “It’s important to understand that SSDI is different from regular Social Security, and the application process can be rigorous, so it may be helpful to seek advice from a financial planner or disability professional. .”
Account for inflation and cost of living adjustments
Retirees with medical issues also need to make sure their retirement budget has room for inflation and cost-of-living adjustments.
“Health care costs often rise faster than inflation, making it important to plan for increased costs over time,” Meyer said. “Investments and other sources of income with growth potential can help offset these future costs. Pensions and other retirement sources can also help offset these future costs, as many companies do not offer this protection. It is also important to understand whether your income is adjusted for inflation.
Consider care options
If you have a medical problem, caregiving is a big consideration.
“It’s important to consider not only the cost of professional treatment, but also the potential need for family intervention,” Meyer says. “If caring for a loved one is part of the plan, it is important to openly discuss expectations and advance planning for caregiver burnout and caregiving breaks.”
Check out nursing care insurance
Long-term care is not covered by Medicare, so you should consider long-term care insurance or hybrid insurance to cover that potential cost.
“This type of treatment is expensive, and without planning, your savings can easily be wiped out,” said Steven Kivell, CFP, ChFC, CLU, senior editor at InternationalMoneyTransfer.com. Ta.
Increase your retirement assets
Take action now to get the most out of your retirement plan investments while you’re still working.
“If you’re over 50 and have catch-up options in your 401(k) or IRA funds, you should try to increase your retirement investments,” Kivell says. “This will require you to set aside additional funds for unexpected medical expenses, which will likely exceed your overage estimate.”
Seek professional advice early
It’s best not to do all this alone. Get help from a professional. Whatever they charge will probably be worth it in the long run.
“Having a team of experts, including financial planners, medical professionals, and estate planning attorneys, is critical to ensuring that every aspect of your retirement plan meets your health needs,” Meyer said. said. “Working with a fiduciary financial planner can help you navigate these complex decisions and ensure your financial plan remains solid despite potential health issues. .”
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This article originally appeared on GOBankingRates.com: How to financially prepare for retirement if you have health concerns
