Long-term care is generally the most significant question mark when saving the optimal amount for your retirement years. According to Financial Professional Barry Bigelow, “statistically, if you're a married couple, there's a 25% chance one of you'll need this type of care.” The concern here because, it's an unknown expense based on unknown needs. This frustration is a leading reason why many people continue to work longer than intended.
If you're eligible, start using a health savings account (HSA). Married couples can put away $7,300 per year. The money goes in pretax and comes out without taxation when you use it for qualified medical expenses, so it's a solid financial move. If possible, hold your HSA money as long as possible, and pay any medical bills out of pocket. Using your HSA as a savings tool encourages growth, and when you retire, you can reimburse yourself for past expenses.
Another overlooked expense falls into play when people retire early (before age 65) and discover they've lost health care coverage. While you can take Social Security as early as age 62, Medicare won't kick in for another three years. Before making that leap into your retirement years, you'll want to look into options such as continued coverage from your employer, a spouse's coverage, or the cost to purchase coverage through the Affordable Care Act.
After working through health care expenses, it's time to consider the care of your home. Where you live now might end up too big, with too many stairs, and too far away from doctors and family. Your home will likely need renovations to make rooms, especially bathrooms, safer as you age, and as the cost of living increases, so will the cost to have someone make these changes. It's worth looking into what you can do now and how much you need to budget to spend later on.
Planning for expenses during your retirement can feel frustrating with so many unknowns. As financial professionals, we can help you with planning, by answering questions, and connecting you with other professionals you’ll need during your journey. Give us a call today at (704) 216-2260 and let’s talk.
Adapted from WDIO ABC