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3. You Didn’t Plan for High Healthcare Costs
You know you’ll need to pay for healthcare in retirement. But you might not realize how high that expense will be.
“When I tell clients in their 40s that basic healthcare costs in retirement are currently more than $250,000, they about fall out of their chair,” said Brandon Hayes, a certified financial planner with oXYGen Financial in Atlanta. In fact, retirees can expect to spend even more than that. Fidelity Investments estimates that a 65-year-old couple retiring this year will need $275,000 to cover medical expenses in retirement.
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What to Do
When calculating how much you need to save for retirement, be sure to figure in healthcare costs, which could be drastically higher than what you’re paying now. “Also, don’t overlook small items like prescription co-pays for those who have diabetes and other health issues that require years of medication, which certainly won’t end in retirement,” Hayes said.
When you’re in retirement, compare Medicare options to make sure you get the right plan for your needs. It can be worth spending more on the premium for a comprehensive Medicare Advantage plan or supplemental Medicare plans to get better coverage and reduce out-of-pocket costs, Littell said.