Kennedy Advisory Group
3109 Woodcliff Cr.
Birmingham, Alabama 35243
Health Planning For Retirement: Frequently Asked Questions
While planning for retirement may not necessarily be at the top of your to-do list, it should still rank among your priorities—regardless of your age. You may think that retirement is a long way off, especially if you’ve recently changed jobs, started a family, or are sending children to college. While you may feel that spending money on your children or family’s current needs is more important, instead of saving for your retirement, they (and you) will feel much better knowing that you have a secure retirement planning strategy in place. Read on for some frequently asked questions and answers about retirement health plans.
When Is The Best Time to Begin Saving For Retirement?
As soon as possible. One of the biggest challenges to retirement saving and health planning is that people frequently wait too long to begin saving. Ten or 20 years ago, people didn’t start thinking about retirement as early as they do now, but recently there has been more information made available about the need to start contributing to your 401k or Individual Retirement Account (IRA) by your mid-twenties. Since companies often match your contribution, it makes sense to start saving as soon as possible. If you do not have a company-matched contribution fund, consider opening and regularly adding to either a Roth IRA or Traditional IRA. For more information, you should contact your financial advisor.
How Concerned Should I Be About Health Care Retirement Planning?
Health benefits are normally worth thousands of dollars and, as such, protect you against financial risk in case of illness or accident. While It is easy to take health benefits provided by an employer for granted, unless your company provides full retiree health benefits, once you retire, you’ll need to figure out how to cover these costs or a portion of them on your own, including monthly premiums, co-payments and other out of pocket health expenses in your retirement budget. If you plan to retire before age 65, you should look into individual plans offered by insurers, or through different community organizations. Even if you’re young and healthy, consider options that qualify you to open a Health Savings Account (HSA). This type of account allows you to save now, tax-free for a time when you will have higher out-of-pocket medical expenses.
What are my Health Care Options if I Retire Before Age 65?
Your employer must make coverage available for up to 18 months if you retire before turning age 65. If you retire before age 63 1/2, evaluate your health coverage needs, including doctor visits, prescription drugs, and potential long-term coverage. Then consider purchasing an individual health plan from your insurer or professional/alumni association you belong to, or look at groups that offer health plans, such as the Chamber of Commerce. You may also consider working part-time as some employers offer benefits to employees who work a minimum number of hours each week.
If I Retire At Age 65, What Will My Medicare Options Be?
Beginning on January 1, 2006, a new prescription drug plan took effect that is available to everyone with Medicare benefits. Join a Medicare prescription drug plan as soon as you are eligible because, if you wait, you may pay the penalty to join later. Plans vary by cost, the number of drugs covered, and pharmacies you can use, but all plans must meet a minimum standard for drug coverage that Medicare sets. Work with your doctor and a Medicare health plan provider to find the Medicare Part D plan that best meets your prescription drug needs. Determining your Medicare eligibility and benefits can be difficult on your own, so be sure to enlist the help of your trusted financial planner, who has years of experience helping people just like you sort out their health care options for the future.
Is It Feasible That I Will Be Able To Rely on My Employer Health Benefits After I Retire?
Become informed about your health benefits options, such as purchasing individual or group coverage on your own, and plan out-of-pocket health care costs. Find out from your human resources department or company benefits website whether or not your company offers retiree health benefits. Then find out the details of your retiree benefits package. Be aware that some companies are trimming benefits or doing away with them altogether for future retirees. If you are not employed, but your spouse is considering retiring, ask about any spousal benefits his or her employer may offer.
I am Self Employed and would like to Retire Before age 60. Is This A Possibility?
If you decide to retire five years before Medicare coverage becomes available to you at age 65, you should evaluate other health benefits options. Since you are self-employed, you should talk to your health plan provider about extending your benefits into retirement. You may also consider purchasing an individual health plan from a professional/alumni association to which you belong.
I am Currently Unemployed; what are My Retirement Saving Options?
If you are married, you and your spouse should begin retirement planning together by reviewing your health benefits and financial needs. Find out what kind of retirement benefits your spouse’s employer offers, including health benefits after retirement or a pension.
Should I Consider Purchasing Life Insurance?
Purchasing life insurance is a way to protect loved ones from financial hardship when you pass away. It can be used to cover funeral expenses, pay off a mortgage, fund a child’s education, pay taxes or supplement your family’s income. Deciding on how much life insurance to buy depends on your age, the ages of your family members, your lifestyle, and your debts. For more information talk to a Certified Financial Planning Professional, because setting up your life insurance policy correctly can mean the difference between your family inheriting all of your retirement investments soon after your death, and having to work very hard at their own expense to reclaim them.
As A Woman, What Should I Keep In Mind About Retirement?
It’s a statistically proven fact that women tend to live longer than men, and experts say they are 50 percent more likely than men to need long-term care. Because of this, married women should be involved in all aspects of retirement planning and budgeting of the couple’s pensions, Social Security, and savings, as well as their long-term care options. Couples should especially consider purchasing a long-term care policy in the older spouse’s name to preserve their savings.
According to The Office on Women’s Health, more than 50 million American women are postmenopausal, and within the next 20 years, this number is expected to increase to 60 million. As postmenopausal women head into retirement, they should be aware of special health and dietary needs. The Centers for Disease Control and Prevention recommends women keep up-to-date with health screenings such as mammograms and colorectal cancer tests. Women experience an increased risk of heart disease, osteoporosis, and certain types of cancer. This is a time when a diet rich in fiber and calcium, along with plenty of exercises, can improve your overall health.
What If My Spouse and I Don’t Retire At the Same Time?
Couples in this situation have a unique opportunity to receive health benefits coverage from the working spouse’s employer if offered. When planning for retirement, base your timeframe on the younger spouse. Both spouses should be involved in benefits planning; in case one spouse dies, the other can be well informed to make sound financial decisions for their future.
If you and your spouse both work, discuss when to start taking out Social Security benefits. It is often best for the spouse with the smaller Social Security check to begin taking benefits earlier, around age 62, and the other spouse to wait until age 65 or 67. When one spouse dies, the other spouse keeps only one check, but it doesn’t have to be his or her own; it can be the larger of the two checks.
Should I Consider Hiring a Financial Planner If I Don’t Have One?
Absolutely. A Certified Financial Planning professional offers knowledge and extensive experience that can make planning easier and more effective. While a CFP professional cannot predict your financial path, they can advise you on how to respond to events during your retirement journey. Your Certified Financial Planner should be your primary resource for answers to retirement, health care, and any financial planning concerns.
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