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Funding Health-Care Expenses

Health care is one of the largest expenses in one’s retirement years. Although most people know they will have health-care costs after they retire, it can be hard to quantify. While individual medical support varies, it is estimated that by age 65, a healthy couple will spend close to $13,000 on health care annually.1

Take steps to prepare for this future expense whether you are close to retirement or just starting your career.

  1. Take advantage of a Health Savings Account (HSA): This account is available if you have a high-deductible health plan (HDHP). An HSA offers deductible contributions, tax-free investment growth and tax-free withdrawals for qualified medical expenses. Unlike Flexible Savings Accounts (FSAs), unused contributions into an HSA are always yours and, therefore, will be carried over to the next year to allow for account growth.
  2. Understand the impact of Medicare: Make sure you sign up for Medicare when you are first eligible. Not enrolling during the Initial Enrollment Period may cause a gap in your coverage and you may have to pay a lifetime late enrollment penalty. The Initial Enrollment Period lasts for seven months, starting three months before you turn 65 and ending three months after the month you turn 65.
  3. Don’t forget about long-term care: Long-term care is needed when someone has an accident, illness or chronic condition and cannot perform the Activities of Daily Living (ADLs), such as eating, bathing and dressing. On average, monthly nursing home care can cost around $7,500 to $9,000.2

Retirement Planning Should Include Health Care

As you get closer to retirement, it’s important to evaluate and familiarize yourself with Medicare Parts A, B and D as well as Medicare Advantage and supplemental coverage. For those who are still working and not enrolled in Medicare and your employer offers an HDHP, now is the time to open or add to an existing HSA. Even if you switch jobs, your HSA is portable and you can continue to contribute to your HSA as long as you are still enrolled in an HDHP.

No matter if you are just starting your career and looking to open or contribute to an HSA, or you are close to retirement and need help evaluating your health-care options, a Jemma Financial Advisor can help you make informed decisions. Contact us today to start a conversation.

1 RBC Wealth Management, 2022. 2 Consumer Affairs. 2 Consumer Affairs.

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