Your Retirement, Medicare and Long Term Care Questions Answered
Retirement. It’s the wrong word for most of us when we hit that magic number around 65 and it’s time to quit work. These days, it doesn’t mean what it used to — slowing down or backing off from life’s challenges.
It’s an exciting time of opportunity. Or it should be, if you planned it out carefully. But the biggest worry for many of us is whether we’ve saved enough money to cover our lengthening life expectancy.
If you’re blessed with good or reasonable health, you’ll likely have many, many more active years ahead. Average life expectancy is approaching 80 years and there are now around 55,000 Americans aged 100 or older. Wow!
The flipside of that coin is that the average cost of out-of-pocket medical care for a couple aged 65 today is around $260,000.
That’s only if you’re been wise enough to ensure you have good medical insurance in place. For most of us that means Medicare and Medicare supplemental coverage, or a Medicare Advantage plan.
And if you don’t have long term care insurance, add an average $130,000 to that number.
That’s why the Number 1 priority for retirees and those approaching retirement age is getting the best health insurance in place.
But that’s not always easy. You’re suddenly faced with a maze of options that are difficult to compare, while you’re being bombarded with mailshots from lots of insurance companies wanting you to buy-in to their plans.
The sane alternative is to bring in an expert — an agent like Putnam Record Insurance in Dunkirk and Chautauqua County — who understands all the complexities, can explain and help you understand your options, and then secure the right coverage to meet your needs.
But there’s much more to retirement than that. Let’s take a look.
How Do I Prepare For My Retirement?
AARP, the American Association of Retired Persons, suggests there are 10 important steps to preparing for retirement:
1. Define what kind of retirement you want, in terms of things like travel, volunteering, hobbies, etc. Try to set 5 goals for your future.
2. Count your money and other assets. Do you need more? Can you make money from your hobbies or part time work?
3. Check your health. Review your diet and exercise. Can they be improved?
4. Decide when to collect Social Security. There could be advantages in waiting till you’re 70. Here’s a free calculator to help you decide what’s best for you: http://tinyurl.com/SS-benefits-calc
5. Build up a network of friends and contacts, using the Internet if you can. It’s good to be in touch with others.
6. Decide if you need to work and, if so, how much — either because you want the money or you want the fulfillment of work.
7. Create a retirement budget by tracking your income and spending over a few months. More on this below.
8. Find ways of cutting spending if you need to. And, if you haven’t retired yet, look at whether you can save more.
9. Prepare for the unexpected. Think about how you’d pay for and deal with unexpected things from a leaky roof to a major illness.
10. Stick to your plan!
Preparing a Retirement Budget
The key elements of your budget are simple: how much is coming in, how much you spend on both essentials and things that are nice to have, and how much debt you have.
Then work out how much you’ll need for any big changes you plan to make, like launching new hobbies or chasing those goals.
Hopefully, you’ll have investments through 401k or IRA plans. Now is the time to take stock of them and seek advice from an independent financial expert on whether you have the right mix of investments as you head into retirement.
If you’re still working and want some help on your financial needs in retirement, try this calculator: http://tinyurl.com/retire-calcs1
How To Prepare For Your Parents’ Retirement
Perhaps it’s not you who’s about to cross the retirement threshold but your parents. And you want to do as much as you can to support them.
The list above should help and we also discuss below important issues about getting the right insurance coverage — and getting the timing right.
What is Medicare? Do I Need Medicare?
Medicare is federal health insurance mainly for people aged 65 or older.
It’s split into several parts. Part A covers hospital and other in-patient treatment and there is no charge. Part B covers outpatient treatment including doctor visits and there is a monthly premium.
Part C covers Medicare Advantage programs, which we’ll talk about later. And Part D covers prescription charges.
For most people, Medicare is the core of their health protection program in retirement.
There’s plenty of info on how it works, notably from the Center for Medicare and Medicaid at www.cms.gov. If you want a book, try Medicare for Dummies by Patricia Barry.
However, important things to know right now are:
- Medicare doesn’t cover all of your medical costs. It excludes dental and vision care for example. It pays hospital in-patient bills (Medicare Part A).
For most other things it covers (Medicare Part B), it only pays 80% of the cost. You have to find the balance from your own pocketbook or through a Medigap plan, which we discuss below.
- Generally speaking, you shouldn’t delay in registering for Medicare at 65, even if you don’t plan to retire (there are some exceptions). Otherwise, you could be penalized later on.
We’re always happy to answer Medicare questions from Putnam Record Insurance clients across Dunkirk and Chautauqua County too!
You can find more information on Medicare by clicking the image below.
Do I Need Medicare Supplementary Insurance? What Is Medigap?
Medigap is a term used to describe Medicare Supplementary Insurance and its main purpose is, as the name suggests, to fill the gap between the 80% Medicare pays and the full amount of a bill.
It’s not that simple, however. There are actually 14 different types of plan, lettered from A through N (though 4 of these are no longer available to new members). Each offers different types of benefits, with correspondingly different premiums.
There are rules about when you can sign up for Medigap. This is known as the open enrollment period.
When is open enrollment for Medicare supplement plans?
Answer: Six months from the first day of the month of your 65th birthday (providing you already enrolled for Part B with Medicare) or within six months of whenever you do sign up.
It’s really important to know that signing up during this initial open enrollment period guarantees you pay the same premium as everyone else, regardless of your health.
Signing up at other times cold mean you pay more — perhaps considerably more.
Don’t let these complications worry you. Speak to Putnam Record Insurance and we’ll identify the coverage you need and help you sign up.
What is Part D Insurance? Do I Need Prescription Insurance?
Unfortunately, that’s not the end of your Medicare Insurance needs. Neither Medicare Parts A and B nor Medigap meet your prescription costs.
This is covered within Medicare Part D and is provided by private insurers. Again, there are a wide range of policies with not only different levels of coverage and co-pays but also different types and brands of drugs.
Without careful monitoring or the support of an expert agent, you can end up paying too much for a Part D policy that may not even cover the drugs you need. You can switch from one plan to another through an annual open enrollment period from mid-October to early December.
What is a Medicare Advantage Plan?
Ah, you might have been wondering what happened for Medicare Part C.
This refers to Medicare Advantage Plans. These are policies from private insurers that cover both Medicare Parts A and B (and sometimes D).
In other words, you have a private insurer that pays for all or most of the other Medicare coverages for a single premium.
It’s an alternative for replacing some or all of the other plans. Oftentimes, it’s cheaper than the others but there may be restrictions on which doctors you can see and there may be deductibles to pay after office visits.
On the other hand, some Medicare Advantage Plans offer additional benefits such as vision care coverage.
Putnam can help residents of Dunkirk and Chautauqua County decide whether you should opt for this type of policy, identify the best insurer for your needs, and then arrange the insurance.
Can I Switch Between Traditional Medicare and Medicare Advantage Plans?
Yes. If you think one might now be more suitable for your needs, you can switch during the open enrollment period, but the terms might not be as advantageous as they were when you were 65!
Is Long Term Care Insurance Covered Under Medicare?
No, in the main it isn’t, though there may be limited coverage for certain types of nursing home or hospice care.
It’s important to know this because if you need long term care, either at home or in a facility, costs are rocketing.
Without long term care insurance, you could fairly quickly burn through all your savings and assets paying for the specialist care you need.
The need for long term care, or assisted living, is based around what are called Activities of Daily Living (ADLs) such as the ability to dress, feed or shower yourself.
If you can’t do some of these things, you may need professional help, sometimes for many years.
Residential services cost around an average of $50,000 a year but can cost a lot more.
Speak to the experts at Putnam to help you answer the question, Do I need long term care insurance?
Putnam Record Insurance can answer your “prepare for retirement” questions and tell you much more about Medicare and your options.
There’s no need to struggle through these complex issues, when there’s no-cost, no commitment help so easily at hand. Please check our Helpful Links for more information on your local retirement support!