2. Review your insurance options
Most retirees use Medicare, but even within that system there are different options. You may also want to consider supplemental insurance, known as Medigap, to help cover costs not covered by Medicare, although you’ll need to consider how any premiums and deductibles would impact your out-of-pocket spending. Since Medicare generally doesn’t cover long-term care, you may also want to consider long-term care insurance. Some companies offer what are known as “hybrid” policies that may cover long-term care if you need it or convert that benefit into traditional life insurance if you don’t.
3. Think about other sources of retirement income
Because healthcare expenses are generally an unknown, you may feel more confident if you have a reliable source of guaranteed retirement income, such as regular payments generated by annuitizing some funds to create lifetime income. The annuity income may be able to cover your regular monthly expenses, and you can tap into other retirement or investment accounts if you have an unexpected and costly medical need.
No matter what strategy you choose, it’s important to keep in mind how you want to receive healthcare in the future, because that can significantly impact the cost. Home health options are increasing as technology makes it easier to connect with doctors from home or have them monitor your conditions remotely. If you explore home care as an option, consider how any family members may be impacted financially if you ask them to be your caregiver. Keep in mind that other services, such as home custodial care, might be needed to assist with cooking, cleaning, and other chores. If your care needs are limited, another option may be a continuing care retirement community (CCRC). These flexible-lifestyle communities, which have recently grown in number, support older adults who may only need limited care to start but who could eventually need more care in the future. Residents in CCRCs can adapt their living arrangements to evolving healthcare needs without having to move from one place to another. Your choices may help determine how you and your financial advisor work together to set up a savings plan.