Healthcare And Retirement Planning

Published by Christina Hester Snyder, Associate Partner and Wealth Advisor


When thinking about retirement planning, it is easy to get lost in investment math. Percentages, rates, yields, earnings, and returns are words you hear again and again until they lose all meaning.

Too often there is one variable that gets overlooked in the planning, and that is healthcare. Healthcare in retirement has the potential to be a devastating influence on your 401(k), and if you aren’t prepared when a health difficulty comes your way, then you could be in for serious financial difficulty.

What Health Costs Affect Retirees?

How big of a crisis could you be facing with health costs? According to Fidelity, the average retired couple faces upwards of $295,000 in health-related expenses. And that is before calculating long-term healthcare costs, which can be some of the heftiest expenses of all!

In addition to being prepared for the inevitable health expenses that occur throughout retirement, there are a few insurance expenses that can catch you off guard if you don’t know about them.

For example, many people don’t realize that they are not eligible for Medicare until age 65, regardless of what age they retire. If you lose your employer insurance by retiring at age 60, you will need to float marketplace or private insurance for 5 years, at a rate that will likely be 3-4 times more expensive.

The Benefits Of An HSA

An HSA (or health savings account) is a great way to help mitigate some of these health expenses. An HSA is a tax-advantaged savings program, like a 401(k) or an IRA, sheltering your savings from taxes as long as they are used for health-related expenses.

The great thing is that an HSA can be invested freely into the same types of avenues as a 401(k), gaining compound interest to potentially build a considerable resource in the event of a medical crisis.

One way you can think of an HSA is as an investment account wrapped in a warm, fuzzy, tax-exempt blanket that will let your money go much further than if you had to pay taxes on it first.

Getting Your Medicare Coverage Right

One other area of retirement health that can be a bit tricky to get a handle on is the area of Medicare. Like most blessings that come down from the government, it is neither simple nor completely comprehensive.

Medicare Part A offers coverage for hospital bills that exceed your deductible. This coverage is for all qualifying 65+-year-olds. It is important to know that Part A has gaps in coverage. You will want to look into covering those gaps through secondary insurance called a Medigap policy.

Medicare Part B is optional coverage for medical expenses, and Part D is optional coverage for prescriptions. Both Part B and Part D require an additional premium that needs to be considered when planning for retirement expenses.

We’re Here To Help

Given the number of options and the complexities surrounding Medicare, it would be wise to sit down with an expert who can guide you through your options, and advise you based upon your specific situation.

If you are ready to make sure that your health coverage needs are going to be covered correctly during retirement, don’t procrastinate and put your future at risk! Schedule an appointment today to sit down with one of our advisors and walk through your retirement healthcare plan as soon as possible. Contact our office by calling 410-821-6724 or emailing [email protected].


About Jacob William Advisory

Jacob William Advisory’s mission is to empower their clients toward pursuing their financial objectives through the principles of proactive communication, education, and disciplined processes and service. They are a wealth management firm focused on leading their clients toward their definition of True Wealth. Located in Timonium, Maryland, and having a local and national presence, their team provides the highest level of service for affluent families, business owners, executives, and institutions.

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