Managing health care costs amid the surprises

If there is life insurance, the spouse may be able to maintain their current lifestyle

Statistically, women are living longer than men.  This can be a good thing or not so good, depending upon your financial situation, so it is important that women take charge of planning for health care in retirement. Of course both spouses should be involved in the process, but you may be surprised how different your expectations are. Life is full of surprises, how you manage health care costs in retirement shouldn’t be one of those surprises.

When we hear of a neighbor, co-worker or family member whose spouse dies unexpectedly, our sympathy, and, usually our concern goes to the survivor, and we wonder how they will be able to cope emotionally and financially. If there is life insurance, the spouse may be able to maintain their current lifestyle. But what about the rest of the survivor’s life? Will they remain in good health for a decade or more, or will they acquire a debilitating chronic condition? Even if they remain healthy, there may come a point when they require some help taking care of themselves.

In many cases one of a couple may feel that the house and investment portfolio they have built over their working years will be sufficient to self-insure a death or a health crisis to one or both of them.  But what if one of you have to quit or cut back working, which would cause an unexpected drop in income? What if the funds you expect to save in retirement, such as maintenance for two vehicles, work clothes and other work related expenses, have to be paid out for health care? Sufficient health insurance and adequate funds set aside for out-of-pocket medical costs will make you less fearful about the future.

Many people pay their annual house or vehicle insurance without thinking about whether or not they will need it, because it is mandatory. On the other hand, health insurance, such as critical illness or long term, is not mandatory and is often declined by individuals because they feel they have a more pressing need for the monthly/annual cost of the insurance. It is very important to work with your advisor closely throughout the years as your situation changes.

When you are first starting out and have a fixed amount of monthly funds, you have to determine what funds can be allocated to your insurance needs, because you are also trying to save for children, home and retirement. For couples, the most devastating scenario is often when the husband dies unexpectedly and the wife lives on with limited resources. Many women will remain relatively healthy for many years, but face the gradual decrease of capabilities, from being able to go upstairs to doing their own laundry. Planning for some type of assisted living, along with long-term care insurance, or a plan for self-funding these expenses will ensure peace of mind for a long life.

 

Carol Plaisier, CFP, Investment Advisor with DWM Securities Inc. & Insurance Advisor with Dundee Insurance Agency Ltd. can be reached at the DundeeWealth in Parksville 250-248-2399, cplaisier@dundeewealth.com or www.carolplaisier.com. This is not an official publication of DWM Securities Inc. and the views are those of the author alone, and they have not been approved by, and are not necessarily those of DWM Securities Inc.