Healthcare in Retirement: It’s More Complicated Than 'An Apple A Day'

When you transition into retirement, you are moving from the accumulation phase to the decumulation phase of your financial life. While you may have spent decades growing your wealth, spending it efficiently requires a completely different skill set. One of the most complex — and potentially expensive! — areas you will face is navigating your healthcare.

Healthcare and Medicare make up a crucial pillar in our seven pillars of holistic planning. It is not something you can plan for in a vacuum, as your healthcare choices directly impact your taxes, your investments, and your Social Security.

To help you cut through the confusion, we have put together this Q&A to answer the most pressing questions retirees have about Medicare.

Jump to…

• Will Medicare cover all my healthcare costs in retirement?
• I want to retire before I turn 65. What do I do for health insurance?
• Can my taxes and income affect my Medicare premiums?
• Does Medicare cover Long-Term Care if I need to go to a nursing home?
• How do I pull all of this together?
• Ready to Take the Next Step?
• Citations and Disclosures

Q: Will Medicare cover all my healthcare costs in retirement?

Many retirees assume that once they turn 65, Medicare will take care of everything. Unfortunately, this is a dangerous misconception.

• Medicare is not a one-size-fits-all solution, and there are a number of different options to evaluate.
• You will be faced with an "alphabet soup" of choices, such as the G plan, O plan, or P plan.
• You must also factor in medical inflation, which can run significantly higher than standard inflation, sometimes hitting 8%, 9%, or even 10%.
• Because everyone's medical history, current doctors, and medication needs are unique, you need a customized Medicare plan that aligns perfectly with your specific requirements and budget.

Q: I want to retire before I turn 65. What do I do for health insurance?

If you plan to retire early, you need a strategy to bridge the gap until you become eligible for Medicare.

• A common challenge for early retirees is finding a way to cover their health care during the period before they turn 65.
• You may be forced to rely on COBRA, which only lasts for 18 months and is famously expensive.
• You might also need to explore the Affordable Care Act (ACA) exchange and carefully weigh different subsidies and plan options.

Q: Can my taxes and income affect my Medicare premiums?

Yes, and this is exactly where holistic planning becomes critical!

• There are specific areas within your tax brackets that will directly impact your healthcare costs, known as IRMAA brackets.
• When it comes to medical planning, the government uses a "rearview mirror" approach.
• When you head into Medicare at age 65, the government actually looks back at your income from age 63.
• If you are not planning at least two years in advance for this look-back period, it is going to cost you.

Q: Does Medicare cover Long-Term Care if I need to go to a nursing home?

Generally, no. Long-term care is one of the biggest threats to a retiree's nest egg, and you must have a plan in place.

• Statistics show that seven out of ten people who reach age 65 will eventually need some form of long-term care.
• The costs can be staggering; for example, average nursing home care can easily cost around $11,000 per month.
• Fortunately, there are multiple ways to plan for this risk, such as choosing to self-insure.
• Other options include traditional long-term care plans, life insurance policies with long-term care riders, or utilizing a Medicaid trust.

Q: How do I pull all of this together?

You shouldn't tackle this alone. Your healthcare strategy needs to be fully integrated with the rest of your finances.

• A holistic plan prevents your retirement decisions from being made in silos.
• At The Chamberlin Group, we have a specific team member who specializes in the Medicare and healthcare area to ensure you get the guidance you need.
• Coordinating your healthcare with your tax plan, your Social Security filing strategy, and your investments ensures that your money actually goes the distance.

Ready to Take the Next Step?

We believe that education is the most important part of planning for your future. If you want to make sure your retirement strategy is built to last, we are here to help.

Schedule a 20-minute phone call with a retirement educator. During this call, you can:

• Request a complimentary copy of Don Chamberlin's user guide to retirement, “The Wells of Wealth System” book.
• Ask to get started on your own customized No-Fee Mini Plan, which includes three vital reports: A Social Security Maximization Report, a Tax and Portfolio Audit, and your custom Wells of Wealth plan.

Don't leave your retirement to chance. Call us today and let's get to work putting together a plan for you!

This Mini Plan includes 3 essential reports.

1. Your Social Security Maximization Report,
2. Your Tax & Portfolio Audit,
3. And based on those first two reports, your custom, tailored Wealth of Wells Plan.

We used to charge our clients $2,500 for this comprehensive analysis, but we’ve made it free as our way of helping Americans create more predictable retirements.

(And don’t forget to ask your Retirement Educator about your free copy of “The Wells of Wealth System” book! We’ll mail it out within a couple days of your call at no cost to you.)

Even if you’re not quite ready to take that step, we still want you to feel knowledgeable and empowered as you move that direction. Check out the Learning Center on our website for videos and blog posts that will help you understand the different factors at play in a holistic retirement plan and how you can start making small changes today that will have a big impact tomorrow.

Citations and Disclosures

Disclosures

This commentary reflects the personal opinions, viewpoints and analyses of The Chamberlin Group. It does not necessarily reflect the views of Foundations Investment Advisors, LLC (“Foundations”) and is provided for educational purposes only and the contents are solely maintained by and the responsibility of the applicable 3rd party. The 3rd party content is subject to change at any time without notice, and does not represent an express or implied opinion or endorsement of any specific investment opportunity, investment strategy or planning strategy. Foundations in no way deems reliable any statistical data or information obtained from or prepared by third party sources in this commentary, nor does Foundations guarantee its accuracy or completeness. No legal or tax advice is provided or intended.

Any reference to free or complimentary services/products does not obligate a prospective client to engage the firm or its representative for any future services.

This is not endorsed or affiliated with the Social Security Administration or any U.S. government agency.