‘Life Happens’ - Medical Expenses in Retirement
One of my mentors sent me an article recently that was featured on moneywise.com. The long title mentions how a couple with pensions had their early retirement shattered by sudden medical expenses.
Future medical expenses is one of the main emphasis items of The Future Poor. In financial planning models today, it is one of the things that is left out of the equation due to us being an accumulation focused society. If I give you Option A - save for a vacation or Option B - save for future medical expenses and long-term care. All of us pick Option A. Beach or Care Facility? Beach wins every day.
As a licensed Financial Advisor I am getting really close to believing that you should save for long term services and support, how the government terms later in life medical expenses, rather than for retirement income. Both are best, but the reality is that many are leaving their future medical expenses unplanned for.
Like the couple in this story and for so many others, the last half of life is met with far greater medical expenses and care needs than when we are young. You may have money coming in, like these folks, and are met with the unexpected. Each of us have had it but in our later years it can be a significantly higher cost and eat away any savings faster than anything else we could spend money on.
Care facilities range in price and levels of care but they run $100,000 a year in most cases and most states. Beyond that, extra levels of care are not covered by government programs like Medicare.
There are financial tools that do future medical expenses better than mutual funds, IRA’s and 401(k)’s. But they are not sexy in the least bit. An HSA can be a way to save money for the future but they are limited in their contributions and market exposure. Long-term Care plans work very well for future care but very few people use them because they are not glamorous and require a high level of commitment. Beyond that, few financial firms have the financial strength and business model to even offer these types of plans.
If the financial professional you work with has not brought this important issue up in your planning, ask them what their plan is for you when you encounter future medical expenses and the best financial tool for that job. If you have questions about this important issue, I would be happy to discuss it with you more. It is one of the most important things to plan for when thinking about the future, retirement or my vision of Not Retirement.
Take a look at AARP’s site on Long Term Care (LTC) and the link to the original article.
https://www.aarp.org/caregiving/long-term-care/
As always, if you come across a financially related article you’d like to send my way please do!
Best place to send them is to me.
More next time!
Jonathan