Health care is one of the largest expenses that retirees face, and it’s essential to plan ahead to cover growing medical costs. According to the annual Fidelity Retiree Healthcare Cost Estimate, a typical 65-year-old individual may need as much as $165,000 in after-tax income to pay for healthcare expenses in 2024. Whether you're just starting your career, nearing retirement, or already retired, it’s important to understand how to budget for healthcare costs in retirement.

Health Care and the Retirement Budget

A well-balanced retirement budget is crucial, as it relies on both your income and your total expenses. In the U.S., a May 2023 report from the Board of Governors of the Federal Reserve System revealed that only 41% of adults aged 60 and over felt confident that their retirement savings were on track. This highlights a significant concern for many seniors: ensuring they have enough to cover future healthcare costs, along with other retirement expenses.

Social Security plays a role in supplementing retirement savings, but it may not be enough to cover all healthcare expenses. According to the Social Security Administration (SSA), Social Security will replace about 42% of pre-retirement income for medium earners in 2024, with a maximum monthly benefit of $4,018 for those retiring at full retirement age in 2025. However, Social Security benefits may not be sufficient to cover all medical expenses, especially as healthcare costs continue to rise.

As healthcare costs grow and Medicare benefits come with limitations, it’s important to consider additional sources of income to fill the gap.

What Medicare Covers

Original Medicare consists of Parts A and B. Part A covers hospital stays and inpatient procedures, with an inpatient hospital deductible of $1,632 in 2024. Part B, which covers outpatient services like doctor visits, has a standard monthly premium of $174.70 in 2024 and an annual deductible of $240.

However, Medicare doesn’t cover everything. For example, Part A and Part B do not cover long-term care, dental, or vision care, which are common needs as people age. Without a prescription drug plan (Part D), Medicare also won’t cover medications. Many retirees opt for Medicare Advantage plans offered by private insurers, which generally provide similar coverage but may offer additional benefits, such as dental and vision coverage.

While Medicare covers some healthcare costs, it’s crucial to plan for what Medicare won’t cover, especially in the face of rising medical expenses.

How to Pay for Healthcare Costs in Retirement

There are several strategies to pay for healthcare costs in retirement, including Health Savings Accounts (HSAs) and long-term care insurance.

Health Savings Account (HSA)
HSAs are an excellent way to save for future medical expenses, including Medicare premiums and long-term care insurance premiums. These accounts are available with high-deductible health plans (HDHPs) and offer triple tax advantages:

• Deductible contributions
• Tax-deferred growth
• Tax-free withdrawals for qualified medical expenses

For those in their 50s or older, maximizing contributions is a smart move. Individuals aged 55 and older can contribute an additional $1,000 per year, on top of the standard contribution limits. The regular HSA deduction limit for 2024 is $4,150 for individual coverage and $8,300 for family coverage.

HSAs can also be used for preventative care, such as mammograms or annual physicals, which can help catch health issues early before they become more expensive to treat.

Long-Term Care Insurance
Medicare does not cover long-term care, so purchasing long-term care insurance is another way to protect against potentially catastrophic healthcare costs. This type of insurance provides a monthly benefit for long-term care needs, either for a specified period or for the remainder of your life. However, premiums can be expensive, making it difficult for some retirees to afford.

An alternative to standalone long-term care insurance is to purchase life insurance that offers the option to add a long-term care rider. This allows you to address both your life insurance and long-term care needs in one policy.

CREB: A Solution for Healthcare Costs and Retirement Planning

As you navigate the complexities of healthcare costs in retirement, it’s important to consider how investments can help you safeguard your wealth and ensure you have enough to cover unexpected medical expenses. Compound Real Estate Bonds (CREB) offers an attractive option for U.S. investors looking to protect their capital while earning reliable returns.

Steady Returns to Support Healthcare Savings
One of the key benefits of CREB is its fixed 8.5% annual percentage yield (APY). This provides a consistent income stream that can help you build up the funds needed for healthcare costs in retirement. Unlike stocks or other high-risk investments, CREB offers stability even when the economy fluctuates, making it a strong choice for those looking to preserve their wealth.

By diversifying your portfolio with CREB, you can reduce the risk of volatile assets while earning steady returns. The fixed income from CREB can act as a cushion against medical costs, helping you manage healthcare expenses without sacrificing your quality of life.

Accessible for All Investors
CREB is designed to be accessible, even for those with smaller amounts to invest. You can start with as little as $10, making it an excellent option for retirees who want to supplement their healthcare savings without committing large sums upfront. This low barrier to entry makes it easier for everyone—whether you’re nearing retirement or already retired—to take advantage of CREB’s high-yield returns.

Conclusion: Securing Your Retirement Healthcare with CREB

Healthcare costs are one of the most significant financial challenges retirees face. While Medicare helps cover many medical expenses, it does not address all of them, and healthcare costs continue to rise. By incorporating bonds like CREB into your retirement planning, you can ensure that you have a steady income stream to help cover these costs while protecting your capital.

CREB offers a low-risk, high-reward investment that can help balance your portfolio and safeguard your wealth against the unpredictable nature of healthcare expenses. With its 8.5% APY, no fees, and easy accessibility, CREB is an excellent choice for retirees looking to secure their financial future while managing rising healthcare costs.

Start investing in CREB today and give yourself the financial peace of mind you need for retirement.

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