For many, COVID-19 has as challenged, changed and even disrupted the way you’ve prepared financially for your golden years. It may have you worrying about protecting your savings and health for the future. Now more than ever, planning matters. Making strategic plans now will help you maintain both financial and physical health as you move closer to retirement.
Many people see retirement as a permanent, carefree vacation to do as they please. And it can be, with the right planning. To fully reap the benefits from your years of hard work, it’s important to ask yourself the right questions in advance.
How will you get health care in retirement?
One of the biggest expenses in retirement is health care. People tend to underestimate the care they’ll need in their retirement years—and the cost.
Some companies offer health benefits to retired employees, but most don’t. After age 65, Original Medicare parts A & B are available through the Federal government. Medicare Part A, which covers hospitalization, comes at no additional cost if you paid into Medicare through payroll taxes for at least ten years. Other Medicare coverages include premiums and out-of-pocket costs. Original Medicare covers 80% and the member is responsible for 20%.
This may be enough to cover your needs, but other options are available if not. Private insurance companies, like Priority Health, offer supplemental insurance known as Medicare Advantage or Medicare Part C. If you would like prescription drug coverage, you can review Medicare Part D options as well. You can also explore additional options such as an HSA to help cover healthcare costs during retirement.
Even with Medicare coverage, retirees can face significant expenses for services that aren’t covered. That’s why planning for health care expenses in retirement can prevent costly surprises later on.
There is a limited window to enroll in Medicare – three months prior to your 65th birthday and immediately following your birthday. You need to enroll during this six-month window, or you may end up paying late fees. It’s never too early to review your Medicare health care options. Start today by going to www.medicare.gov or exploring Priority Health Medicare options here.
What will your living expenses be during retirement?
Expenses in retirement can be influenced by a variety of different factors, including your health and desired lifestyle. If you require more health care services or wish to live a more indulgent lifestyle, you should take that into consideration while planning how much to put into your retirement savings.
When thinking about living expenses, also consider when you plan to receive your Social Security benefits. If you take them at 62, the minimum age, you may lose up to 25% compared to if you wait to receive them until you’re 70. Depending on the goals that you set for your retirement, you may end up needing to save more than you originally planned. There are professionals who can help make sure you are putting away enough each week, month or year so that you are able to meet your retirement goals.
What are your plans for your free time in retirement?
We’ve learned a lot from 2020. It’s stressful and unexpected events led many people to add new activities to their routine. When you are a member of the workforce, you spend much of your time working every year. Most people spend around 2,000 hours per year working, and for commuters, it can be closer to 2,700 hours per year with drive time added in.
Retirement is a great time to take on different hobbies and learn new skills. Perhaps you plan to spend more time outdoors. Many retirees find it rewarding to start a new health routine, especially those that have spent most of their working lives at a desk. You’ll be surprised how much just a daily 20 minute walk can make a difference for your health.
Are you planning on moving after retiring?
Many retirees want to continue living in their same house, but it’s important to consider the financial implications. Some people find that it may be beneficial to move into a smaller, more affordable house during retirement. You may also find you need extra accommodations due to physical challenges. Others may find that they are financially comfortable but want to move somewhere they’ve always dreamt of living, often in a warmer climate. Whether you want to stay in your house or move somewhere new, plan ahead for those expenses. The future is often full of unknowns, so it’s best to prepare for any scenario.
What are your sources of income in retirement?
According to the Government Accountability Office, 29% of adults age 55 and above have no retirement savings. Putting off saving for retirement may leave you unable to retire at the age you want. Luckily, even if you don’t have a lot of savings, you may be able to use assets such as a small business or owned real estate property to supplement your income in retirement. And don’t forget to factor in your Social Security benefits — according to the Pension Rights Center, the average monthly benefit for retired workers is $1,469.52.
Planning for retirement takes careful thought and consideration. Asking yourself these questions far in advance will help you get started on a solid plan for your retirement so you can relax and enjoy your hard-earned free time.
To see more tips on saving for retirement, consult with a financial advisor and visit Priority Health’s Retirement Starter. You can also call Priority Health and talk to a Medicare expert toll-free at 833.997.1344. Experts are available Monday-Friday, 8:30 a.m. to 4:30 p.m.