Planning for Retirement with a Plan

Medigap insuranceDeveloping a financially sustainable plan for retirement can be one of life's most stressful processes. Those considering retirement need time to look at the many factors – some of which are unknown – that affect us when we look into a future that we have not yet experienced firsthand. As retirees, we need to not only consider our income, but also our expenses over a retirement that could last as long as 30 years. Retirement for baby boomers and beyond includes a future where two of the most critical aspects of retirement planning – our health and longevity – remain unknowable.

However, the "health care side" of retirement—costs, need and accessibility to health care for ourselves or loved ones—is said to be one of the most important factors in the planning process.

According to a recent article in cincinnati.com, titled Consider health care when retirement planning,” long-term health care may be a considerable expense, with most of this spent during the last three years of life. 

Health care spending has outpaced inflation over the past decade—from a 6% increase to just 2.5% for core inflation.  So what do we do about rising long-term care costs? 

You should examine your cash flow in retirement: monthly income versus expenditures and line that up with the cost of Medicare Parts A, B and D, which is about $1,700 for an individual. With a supplemental "Medigap" C plan, you add $2,200 per year in premiums. That’s close to $4,000 per person or $7,900 per couple. 

Generally speaking, your total premiums and health care costs under Medicare can be estimated based on two factors. A study by the Employee Benefits Research Institute in 2013 predicts that a 65-year-old retired couple will need to fund $255,000 to $360,000 in Medicare premiums alone (including Medigap), as Medicare will cover only 62% of medical costs. Also, remember that Medicare doesn’t cover long-term health care. When you run out of funds, Medicaid fills the gap, which means costs for in-home health care and nursing homes must be covered by other sources, such as long-term care insurance. 

Here are some things to consider when planning for a retirement with long-term health care: 

  • Will you have savings and assets at retirement to cover your projected health care costs?
  • Are you and/or your spouse in reasonably good health now and does your family have a track record of living into their 80s or 90s?
  • Will you work during any stage of retirement and earn money?
  • Do you know when you want to start taking Social Security, and why?
  • What do you project will be your annual income and expenses during retirement, and have you looked at possibly needing to increase your annual income beyond inflation to address potentially higher health care costs?
  • If you need long-term care, have you factored in those needs and costs?
  • Do you have an understanding of various types of long-term care insurance policies? 

Discussing your plans with an experienced estate planning or elder law attorney when planning for retirement is critical to enjoying your retirement years without becoming a burden on children or the state. 

You can learn more about this topic as well as other strategies on our website under the tab entitled: elder law planning in Virginia. Be sure you also sign up for our complimentary e-newsletter so that you may be informed of all the latest issues that could affect you, your loved ones and your estate planning. 

Reference: cincinnati.com (January 19, 2015) Consider health care when retirement planning



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The unprecedented coronavirus pandemic has taken our entire country by surprise. We understand how difficult this time is for America’s businesses and families.  However, we believe it is vitally important that we make every effort possible to continue to offer solutions that avoid disrupting our important partnership with you, your family and friends.  As you know, estate planning is not something that should wait for a more convenient time, therefore the opportunity to address your important goals both during and after this crisis should not wait.  To that end, we have added the option of a ‘virtual consultation’ to our office process.  You will now have a choice of either meeting with us in our office or in the comfort of your own home.