Even if retirement still seems far away in your 40s and 50s, time will pass sooner than you’d initially think. So quit postponing all those plans you need to take care of because that day will arrive pretty soon! The time to take care of future affairs is now.

I know that usually, retirement advice focuses solely on finance. However, we can’t simply ignore the fact that adults need to consider their healthcare costs too when it comes to planning their golden years. After all, who will need those services more than retirees? We’ve asked a couple of experts to share with us some of the best strategies on how to prepare for future healthcare costs, so click next to see!

Focus on building non-retirement savings

Even if this tip might not seem to be healthcare related, it is still a good idea to build up non-retirement savings, and to contribute to the chosen retirement accounts, as Corey Noyes, owner and financial advisor with Balanced Capital, agreed.

For example, let’s say you retire at 62 years old, and you have a couple of years you’re obliged to pay for insurance before Medicare starts. However, your plan would be to live off of those savings of yours, right?

Well, if you’re living off a non-retirement account, then the income that you’ve earned throughout a year will be almost zero. When that happens, substantial subsidies for health insurance through the Obamacare exchange program will be triggered.

Take care of your health effective immediately

You should prioritize your health now, even if you’re still in power. Think of it as an investment for your future that could save you a ton of healthcare costs. David Edmisten, CFP, and founder of Next Phase Financial Planning, LLC, explained that middle-aged people should be careful with their current state of health, but also with their family medical history.

What if there are some chronic health issues in your family that you should know about? Or what if you’re prone to a couple of health issues that develop later in life? Middle-aged people need to watch out for these things and reconsider their healthcare and lifestyle choices if needed.

Read more about healthy changes in your diet, how to start your own workout routine or even basic wellness information. They might help you later to reduce the healthcare costs you’re worrying about! This is the first frugal tip to remember: if you want to decrease the annual healthcare costs in your golden years, make sure you maximize your healthy lifestyle decisions now!

Healthcare costs vary between 9% and 14% of the median older household’s spending, which is a significant amount of money, especially in retirement, according to Edmisten. Reviewing your current health status, deciding to go for a healthier approach, budgeting for expected health costs, and also thinking of new health coverage options, besides Medicare, might help a lot.

Find a life insurance policy that will cover your chronic illness

David Lewis, the founder, and owner of Monegenix, strongly recommended to all middle-aged people to double, maybe even triple-check if their life insurance covers chronic illness benefits. As he stated, it might help someone save most of their precious assets if they have to deal with a serious health condition while they’re retired.

Chronic illness might prevent someone from working or even caring for their health. When this happens, the insurance company has a clause that allows the individual to use a part of their death benefit to meet the healthcare expenses.

Plan for better healthcare costs

No matter how much you’d think healthcare costs will be, I can tell you now that they will be higher than you thought. So you should start planning now, as Andrew Rosen, CFP, president of Diversified LLC recommended.

He also advised considering working with a financial planner, to map out all the possible scenarios, with their cost estimations that might help you reach your savings goals. There are many ways to save money when it comes to healthcare costs, but it solely depends on the situation.

For example, if you have a health savings account, it might be a good option for saving some extra bucks, but there are many other long-term care insurance plans, let alone annuities and other options. The amount of money you will need also depends on your life expectancy, and health.

Learn more about Medicare

Many adults think that Medicare will take care of most of their healthcare needs. However, Medicare isn’t cost-free, and it definitely doesn’t include everything, as Daniel Prebish, director of executive services at Wells Fargo Wealth & Investment Management stated.

In order to get Medicare Part B (which is medical insurance) and Part D (prescription medications), you need to pay certain costs. Your monthly premiums will definitely be higher if you have more money, from ALL sources. When you start planning your financial future, make sure you choose a premium level that is realistic for the income you’re expecting to get during retirement.

Consider long-term care insurance

Kevin Lao, CFP, founder of Imagine Financial Security, LLC, would recommend to anybody to go for long-term care insurance, in case an unexpected health crisis arises and takes you by surprise. As he explained, the majority of people will choose to wait until they are in their 60s or 70s to think about this.

Unfortunately, premiums are extremely expensive, which makes it even harder to pay for one, especially last minute. Besides, an unfavorable diagnosis might preclude you from purchasing long-term care insurance.

In fact, there’s a recent study that shows how 70% of long-term care is given by unpaid caregivers, which are oftentimes family members. This only validates insurance more, as folks that want to “self-insure” are simply not doing so.

Consider a health savings account

Probably the best way to save for healthcare expenses in retirement is through an HSA (Health Savings Account), according to Katie Kavehrad, a financial planner with Paradigm Wealth Partners. As she explained, HSAs are accounts with a triple-tax advantage.

You can see them as a long-term investment, as they are especially good for those who enrolled in a high deductible health plan (HDHP). It’s a personal savings account, where many contributions are tax deductible, it is completely tax-free, and even the withdrawals are tax-free, just as long as you use the funds for qualified medical expenses (deductibles, copayments, and maybe long-term care premiums, too). For instance, in 2022, the contribution limits reached $3,650 per individual and $7,300 per family.

If you’re 55+, you also have access to an additional catch-up contribution of $1000. If you’re planning to retire before being eligible for Medicare at 65 years old, you should see what are your health insurance options until you are able to access Medicare.

For those who decide to retire earlier, this is a great burden, because it will require a significant expense. In other words, you should expect higher costs, and perhaps even poorer health than what you would expect. It’s not because you should be more pessimistic, but it will help you be more prepared for the unknown.

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