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Taming Retirement Healthcare Costs

Taming Retirement Healthcare Costs

Our retirement years are supposed to be the best years of our lives, a time when we can slow down, relax and enjoy everything we’ve worked so hard to achieve. Unfortunately, large expenses can quickly tarnish what we believed to be golden—if we’re unprepared for them. For example, according to Fidelity Investments, a couple retiring this year will need $220,000 in today’s dollars just to cover the cost of their post-retirement healthcare needs.

While that figure is unchanged from last year, factoring potential healthcare expenses into your retirement plan is critical. Fortunately, there are steps you can take to tame those costs.

Get to know your health insurance options.

If you want to control your healthcare expenditures, you need to understand your health insurance options once you retire. Few of today’s firms offer their previous employees retirement healthcare coverage—so you’ll likely need to strike out on your own. This means the government’s Medicare health insurance program will probably be your primary source of coverage. In most cases, you’ll qualify for basic Medicare hospital insurance (also known as Part A), once you turn 65. Provided you paid Medicare taxes while working, Part A won’t cost you a dime.

Part B (also known as Medicare medical insurance) covers doctors’ services, outpatient hospital care, and is not free. You’ll pay a monthly premium for Part B—and there’s no annual limit on your out-of-pocket expenses. You can also choose a Medicare Advantage plan that combines Part A, Part B and additional supplemental coverage into a single healthcare policy. Privately managed, these plans often offer lower premiums or better benefits, though you may be required to use in-network providers.

Then you have to consider your prescription drugs. Retirees typically use a lot of them, and spending for prescriptions has increased 114 percent from 2000 to 2010 according to Fidelity Investments. You can purchase Medicare Part D for prescription drug coverage as a supplement to Part A and Part B or as part of a Medicare Advantage Plan.

Consider early or delayed retirement carefully.

Couples retiring at 62, before they become eligible for Medicare, spend an extra $17,000 per year on healthcare for a total of $271,000 during retirement. According to Fidelity Investments, the extra costs include health insurance premiums for the period prior to Medicare enrollment as well as estimated out-of-pocket costs during that time.

Delaying retirement, on the other hand, can save you money. Fidelity Investments found that couples who postpone retirement until the age of 67 can save about $10,000 per year. This reduces their estimated healthcare costs in retirement to $200,000.

Open a health savings account before you retire.

If your employer has adopted a high-deductible health plan (HDHP), you are eligible to open a health savings account (HSA). An HSA will allow you to pay for qualified medical expenses with pre-tax dollars. While many people utilize their HSA to pay for current expenses, you don’t need to use the money right away. You can actually save your HSA contributions and use them to pay for qualified medical expenses in retirement. Any withdrawals for that purpose are also federal tax-free.

Have you included possible future healthcare costs in your retirement plan? To discuss how much you may need and learn more about controlling post-retirement healthcare expenses, contact your financial planner or advisor today.

 

Good Part-Time Jobs for Retirees

Good Part-Time Jobs for Retirees

Hitting the beach, golf course or bingo hall 24/7 is no longer a golden years’ norm. According to survey sponsored by Merrill Lynch, 72 percent of pre-retirees want to keep working in retirement. And 47 percent of current retirees are either still working, have worked or plan to go back to work in retirement. Many do so to stay mentally active (62 percent), though other often cited reasons for continuing to punch the clock include staying physically active (46 percent), maintain social connections (42 percent), sense of self-worth (36 percent) and making money (31 percent).

For whatever reason, if you’d like to join the throngs of post-retirement employees, consider the following jobs that offer flexible hours, time for travel and more.

Blogger – If you love to write and are passionate about a topic that interests others, blogging could be an excellent post-retirement part-time job. Computer skills are must, including the use of WordPress or another blogging platform. An interest in learning about search engine optimization is also helpful, as you’ll need to use SEO tactics to drive traffic to your posts.

You won’t earn money just by writing blog posts. You’ll need to generate income streams by building a steady following and selling ad space on your page. You can also sell merchandise or affiliate products.

Bookkeeper – If you’re good with numbers, and have training or relevant experience in accounting, a part-time bookkeeping job may be your perfect post-retirement job option. Your hours may vary depending on your employer’s needs. If you work as a contractor, you may only need to put in a couple weeks each month to take care of invoicing and bill paying. Other potential duties include producing financial reports, collections and overseeing audits.

According to the Bureau of Labor Statistics, bookkeepers earn from $21,610 to more than $54,310 depending on qualifications, geographic location, employer, and hours worked.

Home-Care Aide – If you’re physically able to help elderly, ill or disabled individuals with their everyday activities, you might be able to find a post-retirement part-time job as a home-care aide. These professionals assist their clients with bathing and dressing, housework, grocery shopping, meal preparation and more. While some employers require a certification as a nursing assistant, you may be able to skip the middleman and find work directly with a needy client.

Hours vary, and pay, according to the Bureau of Labor Statistics, usually ranges from $7.91 to $13.34 per hour.

Medical Assistant – If you like the idea of working in healthcare but would prefer to stick to the administrative side of things, consider a post-retirement part-time job as a medical assistant. Duties typically include answering phones, scheduling appointments, checking in patients and verifying insurance. Some assistants even get the opportunity to assist doctors with medical records and procedures such as recording vital signs and collecting specimens.

Some employers conduct training on the job, though a certificate from a medical assistant program can be helpful. According to the Bureau of Labor Statistics, average pay is $14.12 per hour, though it may be higher or lower depending on your experience, geographic location and employer.