How to Plan Your Retirement With Medicare In Mind

Medicare can help you save a lot of money in the long run. However, the short-term costs may surprise many people. When figuring out your retirement plan, you should factor in how much Medicare will save you in the long run while also predicting how much your monthly payments will be. Keep reading to learn more.

Understand Your Finances

The first step to retirement, even without factoring in Medicare, is to understand your finances. If you understand your financial picture, you can make an accurate budget for each year. You can also decide how much you can conceivably spend on monthly insurance premiums. Lastly, doing your homework now will help you understand if you are eligible for Medicare cost-savings programs based on your income.

Understand your Health Needs

Another important part of planning your retirement is understanding your health. This means that you need to know what type you are in now and anticipate the likely changes ahead. For example, if you have many health issues now, you are likely to have even bigger health issues ahead. If you are very healthy now, you will most likely have fewer health challenges in the coming years, beyond the normal health problems that afflict people as they age.

You need to know your health needs because they will dictate how much you should spend on Medicare per month. For example, if you have health problems, you should spend more per month on Medicare now because it will save you much more in the long run. If you have virtually no medical problems right now, you can consider decreasing your Medicare coverage since you are unlikely to use it in the next year.

Understand Medicare Costs

After you know your financial and health needs, you can put the two together by picking out your Medicare plan. There are multiple types of Medicare plans which will then determine your costs. Medicare is composed of four parts: Parts A, B, C, and D. The costs of each are below.

Part A

Monthly premium = $0*

Annual Deductible: $1484 for each benefit period (60-day window)

Inpatient Costs

  • Day 1-60 Coinsurance: $0
  • Days 61-90: $371 per day
  • Day 91 and after: $742 per day

Skilled Nursing Facility Coinsurance Days 21-100: $185.50

*For people who have paid 40 tax credits

Part B

Monthly premium (2021): $148.50

Deductible: $203

Part C

Average monthly premium (2021): $21 (but many are $0)

Part D

Average monthly premium (2021): $30.06

Annual deductible: $445

Medicare isn’t exactly mandatory to have, but it’s best to have the coverage in place rather than not. For example, Part A is generally free, so having this coverage would be very beneficial. And, most people enroll in Part B because it makes up a vital part of Original Medicare. Part C is completely optional, but it does often come with bonuses, like dental, vision, and hearing coverage. Part D is also optional, but because it covers prescription drugs, it is encouraged unless prescription drugs are covered by another plan. Medicare supplement plans are also completely optional, but they save people money in the event they require a lot of medical care.

As you can see, planning for retirement starts with understanding your medical and financial needs. Navigating Medicare can be tricky, but at Proinsurance Hawaii, we’re ready to help. Reach out today!