Prepare for Health Care Costs During Retirement

MoneyAs you save and invest for retirement, what are your ultimate goals? Do you plan on travelling the world?

Purchasing a vacation home? Pursuing your hobbies? People often think and plan for these costs. Yet, too often, many of us overlook what potentially could be a major expense during our retirement years: health care. By preparing for these costs, you can help yourself enjoy the retirement lifestyle you’ve envisioned.

Long-term care costs

Many of us may ignore the impact of health care costs because we just assume provincial healthcare will pay for everything. But that’s not the case. Furthermore, provincial healthcare does not include the costs of long-term care, which vary by individual and can be considerable.

So what can you do to help cope with these costs? Here are a few suggestions:

Estimate your costs Try to estimate what your out-of-pocket health care costs might be, based on your health, your age at retirement, whatever supplemental insurance you may carry and other factors.

Key dates

Know the key dates Things can change in your life, but try to identify, as closely as possible, the age at which you plan to retire. This will help you spot any coverage gaps.

Invest for growth and rising income health care costs typically rise as you move further into retirement, so make sure that a reasonable portion of your assets is allocated to investments with the potential for both growth and rising income.

Review your insurance options The purchase of long-term care insurance may offer flexibility and financial resources to stay in your home rather than living in a long-term care facility should you require round the clock medical care.

Considerations

Alternatively, if you live longer than expected you may need to consider the cost of healthcare at a later age and structure your financial strategy to take those considerations into account.

Annuities are one income generating vehicle to consider for those who are concerned about living longer and having to pay health care costs out of pocket later in life.

Develop a long-term care strategy To meet long-term care costs, you could self-insure or purchase insurance coverage.

To learn about long-term care insurance solutions, contact your financial advisor.

Health care

Think about health care directives. If you were to become incapacitated, you might be unable to make health care decisions — and these decisions may affect not only your quality of life but also your financial situation, and that of your family.

Talk to your legal advisor about establishing a health care directive, which allows you to name someone to make choices on your behalf.

Health care costs during your retirement may be unavoidable. But by anticipating these costs, you can put yourself in a position to deal with them — and that’s a healthy place to be.

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