If you’re retired, or soon-to-be-retired, you need insurance. Finding the right insurance and correct coverage requires careful research and planning as we head into the new year. Here’s what you need to know.
Your goals and priorities will probably change as you plan to retire. Along with your goals and priorities, your insurance needs may change too. The end of the year is a great time to review the different parts of your insurance program and make any changes that might be needed.
This is an important time to sign up for special tax-free savings accounts designed just for health costs. Even if you can’t use a tax-free account, it’s still important to save up for healthcare costs. This however, all depends on what insurance plan you choose, or what your employer (if you’re still in the workforce) offers. Here’s how your dedicated Iowa Fiduciary can help you plan and prioritize your insurance needs for the new year.
Finding the Right Health Insurance Plan
After you retire, you’ll probably focus more on your health than ever before. There’s a chance that your health will decline as you grow older, increasing your need for costly prescription drugs and medical treatments. All of this can add up to substantial medical bills after you’ve left the workforce.
You need health insurance that meets both your needs and your budget. Fortunately, you might become eligible for Medicare coverage at the same time you become eligible for Social Security retirement benefits. Premium-free Medicare Part A covers inpatient hospital care, while Medicare Part B covers physician care, laboratory tests, physical therapy, and other medical expenses.
Medicare won’t cover everything after you retire. You’ll have to pay a large deductible and make co-payments for certain types of care. Medicare prescription drug coverage is only available through a managed care plan (a Medicare Advantage plan), or through a Medicare prescription drug plan offered by a private company or insurer.
What if you’re retiring early and won’t be eligible for Medicare for a number of years? Some employers may give you a retirement package that includes health benefits at least until Medicare kicks in. If not, you may be able to continue your employer’s coverage at your own expense through COBRA. COBRA coverage typically lasts 18 months, while this is only a short-term solution, it gives you some time to discuss with your Iowa fiduciary about what other options might be available to you.
Don’t Overlook Life Insurance
Many people aged 65 and older will require some type of long-term care during their lives. On top of that, long-term care is expensive. It’s important to be prepared in case you do need long-term care at some point. Unfortunately, Medicare provides very limited coverage for long-term care. You may be covered for a short-term nursing home stay immediately following hospitalization, but that’s about it. Other government and military-sponsored programs may help foot the bill, but generally only if you meet strict eligibility requirements.
If you’re married, you want to make sure that your spouse will have enough money when you die. You may also have children and other heirs you want to take care of. Life insurance can be one way to accomplish these goals, but several questions arise as you near retirement:
- Should you keep that existing policy in place? If so, should you change the coverage amount?
- What if you don’t have any life insurance because you lost your group coverage at work?
- Should you go out and buy some?
The answers depend largely on your circumstances. Your life insurance needs are different after retirement, some people have an increase in needs while others don’t change. It’s always important to keep your Iowa Fiduciary in the loop with these changes so your portfolio can be up to date.
Auto and Homeowners Policies
Lastly, if you stay in your home after you retire, your homeowners insurance needs may not change much. You should still review your liability coverage with your Iowa-based fiduciary to make sure it’s sufficient to protect your assets. If you’re liable for an accident on or off your premises, claims against you for medical bills and other expenses can be substantial.
Auto insurance raises some similar issues. Review your policy to make sure your coverage limits are high enough in each area. Again, having the right amount of liability coverage is especially important–you don’t want your assets to be put at risk if you cause an auto accident that injures other people or damages property. Weigh your need for any coverages that are optional in your state.
At Johnson Wealth and Income Management, our role is to provide fiduciary services to our clients in the state of Iowa, and ultimately to help manage your risk. This means seeking to help ensure the risk you take is part of a bigger plan that’s appropriate in order to meet your financial needs and goals.
Insurance transfers the financial risk of life’s events to an insurance company. A sound insurance strategy can help protect your family from the financial consequences of those events. A strategy can include personal insurance, liability insurance, and life insurance. Our advisors will give you peace of mind when it comes to communicating and risk and how that may impact your portfolio. It’s important to note that these factors can vary widely from client to client, as there’s no one-size-fits-all approach when it comes to financial planning.
As an Iowa-based fiduciary, Matthew P. Johnson from Johnson Wealth and Income Management seeks to ensure that his clients’ assets are allocated appropriately—across a mix of asset classes. It’s important to meet with us regularly to help with rebalancing your portfolio to help ensure your accounts reflect our latest asset allocation advice and reallocate your assets to reflect changing life circumstances. In all cases, we strive to preserve the capital you need while continuing to potentially grow your wealth in the long run.
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