Remember to Include the Rising Costs of Medicare (and Health Care) in Your Retirement Budget

Published on July 19, 2017

Medical costs are rising and so are insurance premiums. That includes the cost to older adults of Medicare, with increases in co-pays, costly hospital stays and rising deductibles. Add to that the healthcare providers who are out of network and it’s easy to see how medical expenses can take a big chunk out of anyone’s retirement savings.

Although 57 million Americans are covered by Medicare (which in theory is supposed to make health care for seniors more affordable) it doesn’t always work out that way for a variety of reasons. These days medical cost increases are an important part of everyone’s financial planning. Costs will continue to rise (as will premiums and life expectancies) so it’s always wise to plan—and start saving—as early as possible.

Medicare at a Glance

For those of us who are not yet 65 years old, here’s a Medicare primer. Medicare is a government health insurance program designed to ensure that seniors and those with disabilities are able to afford basic health coverage. Depending on your employment history, you should be eligible to start receiving Medicare benefits when you turn 65. People under 65 years old with qualifying disabilities are also eligible for Medicare.

Medicare has four parts: one for hospital insurance, one for doctor visits and tests, one for prescription drugs and another, called Medicare Advantage (Part C) that is covered by private businesses. If you opt to use Part C, your Medicare premium payments will be sent to an insurance company which will then provide you with a private insurance policy.

It’s important to scrutinize each plan to determine exactly how you will be covered.

Medicare is complicated and somewhat convoluted, and many seniors worry about who will cover what, how much, and what they’ll end up paying for a hospital stay, medical procedures, even a trip to the emergency room.

Coupled with flat cost of living adjustments in Social Security benefits and the rising costs of medical tests and procedures, it’s no wonder people are concerned about their retirement years and money.

Think Ahead and Plan Ahead with a Self-Directed Retirement Plan

If you are already saving for retirement in an IRA or a workplace 401(k), you’re on the right track. But most retirement plans only allow you to invest in stocks, bonds and mutual funds.

What if you already know and understand certain nontraditional investments and you are comfortable making your own investment decisions? And, you want to broaden your retirement portfolio beyond stocks and bonds and the ups and downs that the stock market puts investors through?

In that case, you are on track to consider opening a self-directed retirement plan.

In a self-directed IRA (Roth or Traditional, SEP for the self-employed, or SIMPLE in the workplace) you can include real estate, commodities, precious metals, loans and many more alternative assets. That means building a more diverse retirement portfolio with the potential for greater returns than the stock market offers—and the potential to save more for your future healthcare expenses.

If you’re a savvy investor who wants to take control of your retirement savings now—and plan ahead more aggressively for the medical expenses that could be in your future, self-direction could be a great way for you to boost your retirement budget.

Next Generation has lots of informational resources for you to explore about self-direction as a retirement wealth-building strategy. And, as a full-service custodian of  self-directed retirement plans, our helpful professionals can answer your questions about the many options and benefits of self-direction, and help get you started. Check out our white paper library, and see how easy it is to Open An Account, or contact us at Info@NextGenerationTrust.com or 888.857.8058.