For most of us, healthcare will be one of our largest expenses in retirement. According to Fidelity, the average 65-year-old couple retiring today can expect to spend $285,000 on healthcare over the course of their retirement years. For single retirees, the estimates range from $135,000 (for men) to $150,000 (for women).
It’s no wonder most retirees are eager to learn ways to cut back on their expenses in this area. The following strategies can help you reduce Medicare spending to some degree.
Mark the deadline on your calendar. You can sign up for Medicare beginning three months before your birthday, extending to three months after your birthday month. Usually, if you’ve claimed your Social Security benefits this step will be done for you. But check to be sure; if you miss the sign-up window, you will pay higher premiums due to a late penalty.
Plan retirement income carefully. Taxable income in a higher tax bracket can trigger Medicare premium increases. That’s why many retirees work with financial advisors to establish non-taxable forms of income, such as distributions from a Roth IRA.
Shop around. Depending upon your needs, a Medicare Advantage plan might work better for you than Original Medicare. But the premiums can be equal to Part B premiums, or up to about 100 dollars per month more. Comparing the cost versus benefits can help you decide which plan is right for you. In some cases, a more expensive plan is actually worth it in the long run (but not always).
Don’t stick with the same plan forever. As your healthcare needs change, your Medicare plan should change too. Each fall, during the annual open enrollment period, you have the opportunity to evaluate different types of coverage. If you don’t make any changes, your current plan will renew. But you could miss an opportunity for savings if you allow that to happen.
We can help you compare the costs of different plans, and understand their unique benefit offerings. Give us a call now, so that we can evaluate your needs and help you enroll in the right Medicare plan for you. Remember, the annual open enrollment period for Medicare plans will end on December 7. Let’s get started today.