How To Plan For Your Medical Needs When You Retire

Choosing to end a career and go into retirement is a decision that mandates a lot of in-depth planning. As such, it is something that people must account for long before the time comes. After all, everyone should have a clear-cut idea of how many years they will need to work to accumulate the right amount of funds for their post-career lifestyle. This is where budgeting that adheres to a lot of important rules of retirement will come in.

Retiree consults with a healthcare staff

One thing that many individuals overlook, however, is that retiring also means that they will lose access to many things that they currently have. For example, almost everyone who is employed has some compensation that is not based on cash. The most common representatives of that type of income would be medical benefits, paid time off, maternal or paternal leave, and similar. Well, ending the connection with the firm will end one’s eligibility to receive such perks.

The thing is, albeit completely expected, the number of people who fail to consider the cost of such items is staggering.

Luckily, the vast majority of non-cash compensation is irrelevant to someone who is retired. It is not like these individuals will need any paid time off, after all. What does matter, however, is the healthcare coverage that they may lose access to.

Given the United States’ medical system, healthcare insurance is one of the largest expenditures for a lot of households. Retiring will help show how much of a financial burden medical plans can be, especially for those who are high-risk, older individuals.

So, how should you plan for your medical needs when you retire?

Figure Out the Amount That You Will Need

The first thing that you should do is figure out the amount of money that you will need to spend on medical expenses. According to Dennis Farrah, who is an experienced financial expert that has been enjoying his own retirement, 65-year old couples usually need around $285,000 for this category of expenditures. Those numbers are further backed up by Investopedia and Fidelity Investments. Thus, your first step needs to be creating a plan that considers the aforementioned amount.

Due to an extremely high number of Americans having unrealistic expectations, their retirement funds tend to be insufficient when they face medical fees that are much higher than what they budgeted for. Of course, you also need to think about individual factors such as your living situation, marriage status, and current health condition.

The said $285,000 may be subject to change if your criteria are out of the ordinary. Usually, though, the only change that should take place is to adjust the number for a higher amount, not lower.

Look into Your Employer’s Policy on Long-Term Benefits

One of the perks of working for the same employer for a long time is the fact that you will often qualify for any long-term benefits that they offer. This means that you will be entitled to receive certain things even when you are no longer doing any work for them.

The health retirement benefits are the primary example here. These benefits, which millions of Americans rely on, are usually based on being eligible to gain healthcare coverage from the same company that is providing your employer with coverage for non-retired workers (sign up for your Medicare coverage.) Unlike them, however, you should not expect to get free coverage. Fortunately, you will normally receive a discount that helps mitigate the monthly or annual costs of the plan.

Think About Medicare

When you reach the age of 65, you will become eligible to benefit from something that you have been forced to pay for many decades. Medicare, which you pay for through the Federal Insurance Contributions Act, will allow you to find more affordable insurance. Moreover, providers will not have the right to deny you coverage because of any pre-existing conditions.

Then, you should spend some time learning about the four portions of Medicare that you can utilize. These four include parts A through D that translate to hospital, medical, medicare advantage, and prescription drug plans. While three of them are pretty self-explanatory, medicare advantage from Part C tends to confuse people the most. Simply put, it stands for plans offered by private companies that will cover parts A, B, and D.

It is also important to remember to sign up for your Medicare coverage during the installment period. As per the current law, that period begins three months before you turn 65 and ends three months after your birthday. So, since it lasts until the end of the third month after you turn 65, it is usually going to span over seven months in total. These are the seven months when you want to make sure that you enroll, as failing to do so leads to higher premiums in the long-run.

Find a Knowledgeable Agent

Because the medical insurance market has become so prominent in the United States, Dennis Farrah advises that you find an agent who can help you select coverage. Just like buying a car, you will need someone who has experience with multiple providers to guide you through the process.

Additionally, there will be a seemingly endless amount of paperwork that will come into play. Relying on an insurance agent will increase the likelihood that you will find an affordable healthcare plan that does not cut out any essential coverage.


Finally, regardless of how you decide to approach the venture, you must start early. Just like general retirement planning, your medical needs are quite complex, and you must spend a considerable amount of time going through different alternatives.

Since the process could drag on for several months or even years, begin researching options long before it is time to sign up for one. Besides helping you avoid the most common pitfalls, proactiveness will also ensure that you save money.