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Wealth Management: Preparing For Health Expenses During Retirement

2 min read

The financial gurus at Fidelity now estimate that the average couple will need nearly $300,000 in after-tax dollars to cover their healthcare costs in retirement. This figure excludes the cost of long-term care and assumes that the couple will be covered by Medicare beginning at age 65.

But with the 56-to-61-year-old cohort holding an average of only around $163,577 in retirement funds, healthcare costs are poised to consume an enormous chunk of many retirees’ hard-earned savings. And while Social Security can fill in some gaps, with an average monthly benefit of $1,373 (in 2018), many seniors may still face a shortfall. What can you do today to prepare for tomorrow’s healthcare expenses?

How Wealth Management Can Prepare You For Health Expenses During Retirement

Many assume that those who retire with seven figures or more in assets were able to rely on high salaries, an inheritance, or some other sort of windfall to achieve these goals. But in most cases, saving early—and often—is the most reliable way to increase one’s assets, even if the amount you’re able to save doesn’t feel like much.

For example, someone who invests $100 per month from age 20 to 30 will actually wind up with more in retirement than someone who invests that same $100 per month from age 30 to 60. Getting started on a wealth management plan through a financial firm like The Family Wealth Group can provide you with the expertise and strategies you need to achieve your retirement goals.

In addition, a health savings account (HSA) allows you to save funds, pre-tax, for use on future healthcare expenses.

Unlike a flex spending account (FSA), which is generally “use it or lose it,” HSA funds can be rolled over from year to year, even if you’re no longer covered by a high-deductible health plan.

And as long as you use these funds on qualified healthcare expenses, they’re tax-free upon deposit and withdrawal, making them a uniquely beneficial savings vehicle.

But having an HSA isn’t the only path to a stress-free retirement. A wealth management expert can look at your unique financial circumstances to determine the best path for your situation.