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Long-Term Care Planning

Preparing Your Heirs

Long-Term Care Planning

» by Jack Malarik, Senior Wealth Advisor

One of the most significant long-term financial planning concerns for clients is the unknown cost of long-term care during retirement. Long-term care is a collection of services that assist people who can’t perform daily activities due to illness, disability, or advanced age. Most retirees will require long-term care, and the costs are high. Long-term care planning is an essential part of Summit Wealth’s wealth management conversation because of the threat posed by healthcare costs. Read more tips for healthcare retirement planning in today’s blog.

How Much Should I Budget for Medical Expenses in Retirement?

A study by the Fidelity Retiree Health Care Cost Estimate suggests an average retired couple needs approximately $300,000 saved to cover health care expenses in retirement. While saving for long-term care, it’s important to know the factors that help determine how much you may spend on healthcare in retirement.

What Affects Healthcare Costs for Retirees

The total amount you’ll need for healthcare depends on the following factors:

Your Health Status

Your health status entering retirement plays a significant role in how much you can expect to pay. There are three main questions to consider:

  • Are you a smoker?
  • Do you visit the doctor often?
  • Do you have multiple chronic health conditions?

Your answers to these questions help determine your healthcare retirement costs.

Income in Retirement

If you plan to keep working after enrolling in Medicare, or if you’ve saved a significant amount for retirement, the government likely won’t subsidize as much of your healthcare costs.

Where You Live

Where you live while retired affects your healthcare costs. The costs of prescription coverage and supplemental plans vary from state to state.

Healthcare Options for Early Retirees

Most publicly subsidized healthcare options become available at the age of 65. However, if you decide to retire before 65, you’ll need to determine a short-term healthcare plan. Some of the health retirement planning options for early retirees include:

Switching to a Spouse’s Plan

If you have a spouse who plans to continue working, consider switching to their plan. Leaving a job is a qualifying event that enables you to qualify for coverage under a spouse’s plan.

Signing up for a COBRA Plan

You may be able to keep your existing health insurance from your employer for up to 18 months through COBRA. However, you are required to pay the total cost of the health insurance yourself. Asking for a healthcare cost estimate from your company’s HR department helps you determine if this is a viable option.

Purchasing a Private Health Insurance Plan

Healthcare coverage is purchasable directly from insurers or through a healthcare exchange. This only makes sense when you have no employer-provided healthcare available because it’s an expensive option.

Healthcare Options After 65

Medicare is the most popular healthcare solution for retirees over 65. The costs of Medicare come in several forms, and it’s important to know the main parts.

Medicare Part A

Medicare Part A covers inpatient hospital care, up to 100 days of nursing facility care, home health care, and hospice care. There wouldn’t be a premium for Part A unless the participant didn’t pay Medicare taxes for 10 years.

Medicare Part B

Part B covers routine services and supplies. This includes:

  • Preventative services
  • Ambulance services
  • Mental health treatment

The standard Part B monthly premium is $148.50, and participants must pay deductibles and coinsurance.

Medicare Part D and Medigap

Part D helps cover the cost of prescription drugs while Medigap is a supplemental plan that allows you to purchase additional coverage that suits your healthcare needs.

Fitting Healthcare Into Retirement Planning

The climbing cost of healthcare doesn’t have to be a significant strain on your retirement savings. There are several ways you can create a healthcare safety net before retiring.

Health Savings Account (HSA)

HSAs allow you to save money for healthcare retirement planning before you are Medicare eligible. These are high-deductible health plans that offer three tax advantages:

  • Deductible contributions
  • Tax-deferred growth
  • Tax-free withdrawals for qualified medical expenses

If you are in your 50s, you can maximize these plans by taking advantage of employer contributions and catch-up contributions.

Long-term Care Insurance

A study by the Department of Health and Human Services states that a person turning 65 today has a 70% chance of needing long-term care at some point. Purchasing long-term care insurance helps pay for costs not covered by Medicare. This policy allows you to pay a monthly benefit for either a specified amount of time or through your retirement.

Let Summit Wealth Assist You in Your Long-Term Care Planning

Partnering with a reputable financial company is the best strategy for long-term care planning. The advisors as Summit Wealth Partners bring clarity to your long-term financial planning by helping you focus on what’s most important. Some of our financial services include:

Financial Planning

Summit Wealth provides a well-constructed financial plan with clearly defined implementation steps and long-term goals. We help you achieve your financial goals through specialized planning and advice for:

  • Tax optimization
  • Retirement income
  • Family legacy

Our client planning portal gives our clients complete ownership over their financial future.

Wealth Management

Our comprehensive wealth management services combine our investment management, wealth planning, and other specialized services and tailor them specifically to our clients. When you work with Summit Wealth, you receive practical advice that aligns with your goals. Our proactive communication keeps you regularly informed, giving you financial peace of mind.

Summit Wealth has been providing healthcare retirement planning services for nearly 40 years. Contact us today for a complimentary one-hour consultation and see the benefits of our long-term financial planning services for yourself.

Are you seeking help for your long-term care planning? Summit Wealth today to schedule your complimentary one-hour consultation.