As you approach retirement, the reality of rising healthcare costs becomes clearer. When planning for this significant expense, it’s important to consider all aspects – from prescription drug costs and Medicare premiums to long-term care needs.

Join Joel Johnson, CFP® on this week’s Retire Wiser with NBC Connecticut as he breaks down the pressing need to plan for healthcare in retirement.

Create an Income Plan

Everything you’ve done to build a secure and fulfilling retirement could be at risk if you don’t factor healthcare costs into your financial plan. Healthcare is one of the biggest expenses retirees face, and now that we’re living longer, you’re more likely to encounter these costs firsthand. Being proactive and creating a comprehensive retirement income plan can help to protect your assets, preserve your peace of mind, and maintain your quality of life in retirement.

Explore Your Coverage Options

If you don’t work in the public sector or for a union, you might not have access to some of the top-quality employer-sponsored or union-sponsored health benefits, which in some cases cover the full cost of certain healthcare expenses.

For most people without these benefits, it’s essential to have a plan for healthcare coverage. If you retire before age 65 and aren’t yet eligible for Medicare, it’s important to explore your healthcare options. This may include purchasing a plan or joining your spouse’s employer plan.

Understand Medicare and Manage Premiums

Speaking of Medicare, it’s a topic that often causes confusion. It’s important to note that Medicare doesn’t cover everything. One of the largest expenses you’ll be left to face on your own is long-term care. Another common misconception is how Medicare premiums are calculated. Your premiums will be in direct proportion to your taxable income, which you can plan for within the framework of your retirement income strategy.

There are several strategies to consider when planning for these expenses. For instance, you might explore options such as purchasing long-term care insurance or self-insuring for the risk. If you’re looking to minimize your Medicare premiums, one strategy could be to reduce your taxable income.