WBOC-TV 16, Delmarvas News Leader, FOX 21 - Planning for health care in retirement: the 5 don'ts

By Gregg Newby, Contributing Writer, myOptumHealth

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When it comes to retirement costs, nothing is more expensive than health care. Experts may disagree on exactly how much you need, but they all say it's a lot. Even conservative estimates call for more than $200,000 for a period of 15 to 20 years. And that's before you even mention long-term custodial care.

But don't go chewing your fingernails just yet. There's much you can do to prepare yourself beforehand. A health savings account (HSA) is one way to set aside a great deal of money, for instance. But at the same time, there are some things you definitely should not do. If you can avoid these common pitfalls, your retirement will be much more enjoyable.

1. Don't procrastinate. You need to start planning sooner rather than later. The earlier you get going, the better off you'll be in the long run. If costs continue to rise as projected, you're going to need plenty of time to prepare yourself. Start researching your options now. It could mean the difference between quality care and none at all.

2. Don't retire early. Retirees no longer get the same health benefits they once did. If you stop working before you reach 65 and sign up for Medicare, you might suddenly find yourself without any coverage at all. Your employer may try to encourage you with a lump sum or other form of payment. But it still may be a bad idea. If you're forced into retirement, consider getting coverage through COBRA and find another job. That way you'll be able to keep setting the needed funds aside.

3. Don't neglect your health. If you hope to cut costs tomorrow, you need to get healthy today. Proper diet and exercise can help you cut down the doctor's visits. So can changing other behaviors. If you're a smoker, for instance, consider taking a cessation class. And having regular checkups may also help you detect illnesses early on, before they turn into major illnesses.

4. Don't go it alone. Preparing for retirement is a complicated process that involves lots of major decisions. A qualified financial planner can help you review your options and design a strategy that works for you. Preferably, this is someone who is not going to earn a commission by selling you something. Even if you don't have a sizeable estate, a financial planner can still be of help. You'll feel better knowing an expert has reviewed your portfolio.

5. Don't overdo it. Sure, health care is expensive. But there are other things to plan for, too. And though you may be tempted, you can't dedicate every penny to doctor bills. After all, you might end up being perfectly healthy for years to come. You won't have much fun if you're sitting around waiting for an illness to strike. Instead, work with your financial adviser to determine just how much you want to set aside. Then go out and enjoy your retirement.

View the original Planning for health care in retirement: the 5 don'ts article on myOptumHealth.com 

SOURCES:

• Fronstin P, Salisbury D, VanDerhei J. Savings needed to fund health insurance and health care expenses in retirement: findings from a simulation model. Employee Benefit Research Institute. May 2008. Accessed: 07/27/2009
• Pilzer PZ. The New Health Insurance Solution: How to Get Cheaper, Better Coverage without a Traditional Plan. Hoboken, NJ: John Wiley & Sons; 2007.
• Lankford K. The Insurance Maze. Chicago: Kaplan; 2006.
• Stim R, Warner R. Retire Happy: What You Can Do Now to Guarantee a Great Retirement. Berkeley, CA: NOLO; 2008.