Planning for retirement is an increasing concern for many individuals who worry that they will need to be incredibly wealthy to stop working and still have enough funds to take care of their needs. Unfortunately, the amount of savings people have has decreased in recent years, causing significant financial stress during retirement, especially when it comes to the cost of care. In the guide below, we will review this issue in more detail, explaining how to avoid having your life savings or retirement plans wiped out by the cost of care as you get older.
Consider Your Retirement Savings and Start Saving Earlier
It is generally a good idea to begin saving for retirement as early as you can. If possible, consider increasing or maximizing your contributions to your employee savings plan. Additionally, the IRS allows individuals over the age of 50 to make annual catch-up contributions to certain accounts, such as 401(k), 403(b), and IRAs.
Consider Opening a Health Savings Account
If your employer offers a health plan that is HSA-eligible, you should consider enrolling. As part of the plan, you can contribute to a Health Savings Account (HSA) without incurring any tax penalties. Your contributions are made pre-tax, and as a bonus, your savings grow tax-free. You can also take out money tax-free as long as the funds are used for appropriate medical expenses.
Plan Ahead for Retirement and What This Stage Will Mean for You
The average retirement age in the United States is 62. However, retiring at this age has some significant drawbacks. While having three extra years of retirement might sound appealing, during this time, you will not be able to contribute to employer-sponsored savings plans, have a steady income, or enroll in Medicare since the regulations do not allow enrollment until age 65. This means you will have to pay for health insurance out of pocket during these three years.
Think About Long-Term Care and Insurance Options
Although Medicare does not cover long-term care, there are certain policies that do help with assisted living, at-home care costs, and nursing home expenses. In turn, these policies can help individuals rely less on their retirement savings and save more for their future.
It is also worth noting that long-term care insurance, such as life insurance, is more expensive and harder to obtain as you age. That is why it is important to consider these options as soon as possible to determine which is best for you and your future plans.
Likewise, disability insurance enables you to keep receiving income if an illness or injury hinders your ability to work, which can help protect HSA or retirement accounts. Additionally, a well-funded emergency fund can assist individuals in covering sudden medical expenses.
Contact Losavio & DeJean Today To Learn More About Saving for the Future and Helping You Cover the Cost of Care as You Get Older
At Losavio & DeJean, LLC, our main objective is to help our clients live well, independently, and securely for as long as they can. That is why our skilled and dedicated elder law attorneys primarily focus on elder law and special needs planning for seniors, their family members, and persons with disabilities. We also offer assistance in various areas, including retirement tax planning, Medicaid planning, and estate planning.
If you are looking for further information regarding how to avoid having your life savings or retirement plans wiped out by the cost of care, contact Losavio & DeJean, LLC today to speak with our experienced team and learn more about the options you have.