4 Ways to Help Protect Against Unexpected Healthcare Costs in Retirement
One of the major concerns people have
when planning their retirement is how to protect their retirement savings from
unforeseen medical expenses. Healthcare costs have steadily risen, but adequate
planning can help maintain these costs in retirement. This article outlines
four ways to help protect one's retirement savings from unexpected healthcare
costs in retirement.
1. Maintain regular health checkups and
screenings.
Additionally, monitor your health and go
for regular checkups. Regular checkups can help detect any health issue early,
reducing potential medical costs. A healthier lifestyle can also decrease your
likelihood of developing chronic illnesses, which can be costly to manage in
the long run.
2. Establish a healthcare emergency
fund.
Another approach to covering unexpected
healthcare costs is opening and contributing to an emergency fund savings
account. This strategy creates a buffer to cover unexpected medical costs
without dipping into retirement savings. Continue to save so that you have
enough to cover the policy's yearly out-of-pocket deductible amount.
3. Purchase a comprehensive health
insurance plan.
Consider investing in a comprehensive
health insurance plan. A good insurance plan is one of the most effective ways
to hedge against the risk of high medical expenses. Go for a plan that covers a
wide range of medical services, including hospitalization, doctor's visits,
prescription drugs, and specialist treatments. However, it is vital to
understand the terms and conditions before committing as some policies may come
with high deductibles and co-pays, which will impact out-of-pocket expenses.
4. Open a Health Savings Account or
Flexible Spending Account.
Next, address your contributions to
Health Savings Accounts (HSAs). An HSA is a tax-advantaged account that helps
individuals save for future medical expenses through payroll deduction.
Contributions made to HSAs or FSAs are typically not subject to federal income
tax at the time of deposit, which can help stretch your retirement savings.
A Flexible Spending Account (FSA) is an
employer-sponsored benefit that allows you to set aside pre-tax money to pay
for specific health care and dependent care expenses. FSAs can help you save
money on taxes because you don't pay taxes on contributions to the FSA.
Last, consider working with a financial
or insurance professional who is well-versed in planning for healthcare costs
in retirement. These professionals can assist in preparing you for any
unexpected healthcare expenses now and during your retirement years.