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One of the greatest financial
challenges faced by today’s retirees is the rising cost of
health care. Prescriptions, insurance premiums, doctor’s
office visits and hospital stays are all increasing more
rapidly than inflation. Whether you’re in your golden years
or fast approaching them, you must take a serious look at
how health care costs will affect your retirement nest egg.
The causes of rising health care costs are many. Today’s
population is living longer than ever. That’s a good thing,
but it does mean that our health care system is being
stretched to handle the increasing load. New drugs and other
treatments are continually coming on the market to address
health care problems in new ways. Preventive drugs are being
prescribed than ever before.
Some retirees get blindsided by changes in their company’s
health plan. Today, only 11% of companies offer health
benefits to retirees, and that number is decreasing. Many
don’t realize that these retiree health benefits aren’t a
legal obligation of the company and can be changed at any
time. To cut costs, many companies are reducing benefits,
charging more, or eliminating retiree health plans entirely.
For example, one of my clients retired from a large company
and due to its financial troubles and rising health care
costs, his monthly premiums have increased from $40 a month
to $220 in just 4 years.
So what’s a person to do? You can’t escape the rising cost
of health care, but you can certainly plan for it.
Pre-retirees need to take a hard look at their savings plan
to make sure they’re saving enough to cover these costs.
Find a financial calculator on the internet to determine how
much to save.
If you’re still years from retirement and healthy, don’t
think you’ll need to save less. As you age, chances are your
health will decline, perhaps suddenly. So don’t base your
savings on your health situation today.
But saving enough isn’t always practical. Pre-retirees and
retirees alike need to have a back-up plan in place in case
their health care or other expenses take a sudden unexpected
increase. You may need to adjust your investment strategy
and method of investing. Be prepared to reduce your other
expenses, perhaps by lowering your lifestyle or selling your
vacation home. You need to be prepared to tap your principal
if necessary. Some seniors have found themselves reentering
the workplace, either part time or full time to handle these
expenses.
Another way to manage your health care costs is to slash the
costs of your prescriptions. Medicare recipients are
eligible for a Medicare Approved Prescription Discount Card
through the end of 2005. You can check out all the details
at
www.aarp.org.
Many find that ordering drugs through the mail offers them
greater savings and convenience, especially when ordering
from Canadian pharmacies. In fact, several states, including
Illinois, New Hampshire and Wisconsin have taken active
steps to make ordering drugs from Canada easier for their
constituents. All told, 24 states have considered similar
measures. With savings of around 60% in some cases, it’s
easy to see why.
Sometimes ordering a 90 day supply has a lower cost, plus
you save 2 co-pays versus a 30 day supply. Some doctors will
prescribe a higher dose drug with the understanding that the
patient will cut the pill in half. This ‘double dose’ method
should only be used under your doctor’s supervision but can
also reduce your costs. Generic drugs can save you a bundle.
Researching prescription plans, prices and ordering options
can take a good deal of time and can be somewhat confusing.
But the savings can really add up. The good news in all of
this is that today’s seniors are living longer and better
than ever. And this is due in large part to the great
strides in medical research. We may hate to pay more each
year for our health care, but it’s that very care that is
greatly increasing our quality of life. With proper planning
and savvy consumer action, you can continue to afford what
is probably the greatest health care in the world.
If you’d like free, clear, unbiased advice submit your
questions to www.guardingyourwealth.com/askjeff.htm. You’ll be glad you did.
Mr. Voudrie is a Certified Financial Planner, nationally
syndicated newspaper columnist and President of Legacy
Planning Group, Inc., a Private Wealth Management Firm in
Johnson City, TN. He can be reached toll-free at
1-877-827-1463 or at
jeff@guardingyourwealth.com
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