How to Protect Your Retirement Savings from Unexpected Healthcare Costs

One of the major concerns people have when planning their retirement is how to protect their retirement savings from unforeseen medical expenses. Healthcare costs have steadily risen, but adequate planning can help maintain these costs in retirement. This article outlines a few strategies to help shield retirement savings from unexpected healthcare costs.

Purchase a comprehensive health insurance plan.

Consider investing in a comprehensive health insurance plan. A good insurance plan is one of the most effective ways to hedge against the risk of high medical expenses. Go for a plan that covers a wide range of medical services, including hospitalization, doctor’s visits, prescription drugs, and specialist treatments. However, it is vital to understand the terms and conditions before committing as some policies may come with high deductibles and co-pays, which will impact out-of-pocket expenses.

Open a Health Savings Account or Flexible Spending Account.

Next, address your contributions to Health Savings Accounts (HSAs). An HSA is a tax-advantaged account that helps individuals save for future medical expenses through payroll deduction. Contributions made to HSAs or FSAs are typically not subject to federal income tax at the time of deposit, which can help stretch your retirement savings.

A Flexible Spending Account (FSA) is an employer-sponsored benefit that allows you to set aside pre-tax money to pay for specific health care and dependent care expenses. FSAs can help you save money on taxes because you don’t pay taxes on contributions to the FSA.

Establish a healthcare emergency fund. 

Another approach to covering unexpected healthcare costs is opening and contributing to an emergency fund savings account. This strategy creates a buffer to cover unexpected medical costs without dipping into retirement savings. Continue to save so that you have enough to cover the policy’s yearly out-of-pocket deductible amount.

Maintain regular health checkups and screenings.

Additionally, monitor your health and go for regular checkups. Regular checkups can help detect any health issue early, reducing potential medical costs. A healthier lifestyle can also decrease your likelihood of developing chronic illnesses, which can be costly to manage in the long run.

Last, consider working with a financial or insurance professional who is well-versed in planning for healthcare costs in retirement. These professionals can assist in preparing you for any unexpected healthcare expenses now and during your retirement years.

SWG3878283-0924D. Disclosure: This information is provided as general information and is not intended to be specific financial guidance. Before you make any decisions regarding your personal financial situation, you should consult a financial or tax professional to discuss your individual circumstances and objectives. The sources used to prepare this material are believed to be true, accurate and reliable, but are not guaranteed. 

In addition, Preservation Wealth Advisors specializes in providing strategies and guidance for those who are seeking a better lifestyle in retirement. If you have retirement savings of five million dollars or $50,000, we can ensure it works hard. As a result, we offer our experience and knowledge to help you design a custom strategy for financial independence. Contact us today to schedule an introductory meeting!