How do you imagine your retirement? I’m sure you see yourself aging gracefully, a picture of health and happiness, right? Maybe enjoying frequent holidays, catching up with friends and loved ones, pursuing interests and hobbies once your working days are behind you. But your health is certainly not to be taken for granted, and neither is the power that it has to spoil that picture of the perfect retirement.
Simply put, poor health can really put a dent in your retirement savings and a dampener on your plans for an active, fulfilled, retirement. If you’re paying for expensive health premiums and extra medical bills, that money isn’t being used on hobbies or once-in-a-lifetime vacations.
And if you are struggling with your health or even just suffering from joint pain, you may well find your ability to enjoy your retirement is significantly reduced. It’s definitely worth considering how looking after your health is actually a vital part of your financial plan.
What Could Poor Health Cost You?
Making sure that your healthcare needs will be covered both now and in the future requires some thoughtful planning. Did you know that in their retirement years, a couple can expect to pay around $400,000 in healthcare expenses? And women generally end up paying more. Why? Longer life expectancy, more chronic health problems and the increased likelihood of requiring long term care are to blame for the gender discrepancies.
But what might poor health cost you, besides money? Well, it might cost you years from your life. Diabetes, which can be managed fairly effectively through diet and medical interventions, is the seventh most common cause of death in the United States and regularly causes a reduction in life expectancy.
Obesity, excessive alcohol consumption and other harmful lifestyle choices can also reduce life expectancy and increase your risk of having to cope with ill health. And peace of mind may be more important to physical health than you think. Stress is thought to lead to Alzheimer’s, and some identified causes of that stress include financial loss, bankruptcy and unemployment.
In addition to having the potential to cut your life short, living with any of these conditions can also dramatically reduce your quality of life. By not staying active and mobile, you can lose the ability to pursue hobbies you enjoyed or spend as much time outdoors as you would like to.
Simple pleasures like gardening or cooking might be lost. Looking after your health, and doing all you can to make the right choices for your body can make a huge difference when it comes to achieving your goals.
So it’s essential to make sure you are creating space in your life – and in your budget – for a healthy lifestyle. A good diet, active hobbies, regular check-ups at the doctor and dentist – none of these things come for free, but all can help you to stay fitter for longer, and can act to keep some healthcare expenses down.
The Dual Role of Health Insurance
Health insurance is a must-have in any financial plan; an adequate policy should make sure you don’t have to dip into savings to meet the costs of any medical treatment you might need. By protecting your assets with insurance policies, you can use your money on things other than healthcare expenses. Not only that, but instead of compensating for poor health, you can spend your money on staying fit and well.
Don’t forget, health insurance companies want to keep you healthy. By taking out a policy with them, you have transferred the risk of a big health-related cost to them. In turn, they lessen that risk by encouraging you to keep as healthy as possible. Some insurance providers now encourage their policy holders to use new technology like health wearables – watches and the like which monitor your daily movement, sleep patterns, blood pressure and more.
There is room, of course, to be cynical about their motives for doing this and the implications it may have on policy holders – increased insurance premiums for those shown to be less active, possibly. But this also clearly has a win/win element to it. Look for insurance companies that are going to help you on your road to fitness and health, by rewarding you for making good health decisions.
If you take the initiative to adopt a healthier lifestyle, your insurance company won’t see you as such a risky prospect. Your premiums and healthcare expenditure could be lower – meaning less outlay, freeing up money for other parts of your financial plan – and your health will be better.
Looking After Your Health and Your Financial Health
Healthcare costs can have a huge impact on your finances. One of the best ways to protect your assets against unexpected care costs is to use a Health Savings Account, or HSA, if you’re eligible for one. HSAs are available to people with high-deductible health plans, and they are extremely efficient savings vehicles which set aside money just for healthcare expenses.
These are ‘triple tax advantaged’ accounts – contributions are made to these accounts pre-tax, they grow tax-free, and you can withdraw money from them tax-free, as long as the money is used for eligible medical costs. Money in your HSA can be used to pay for some Medicare premiums as well as dental care and long term care – all too often forgotten medical expenses during your senior years. You can find details of qualified medical expenses here.
If you’re not eligible for an HSA, you should always remain aware of the potential for significant healthcare costs to arise in the future. Setting aside some savings or adding anticipated costs to your financial plan can help you avoid your finances being depleted thanks to medical expenses, as can a long term care insurance policy. Talk to a financial planner to make sure you’re taking advantage of all the options available to you – and doing so at the right time.
Seek Out Specialist Support
You don’t want poor health to cost you any more money than it absolutely has to. And you don’t want it to rob your chances of a fulfilled retirement, either. By giving some importance to your physical and mental health, you are paying the most important insurance premium of all.
When you are looking after your health, you are investing in yourself, and giving yourself the best chance of being able to enjoy your retirement years after a lifetime of work. While many illnesses and accidents are unavoidable, plenty of health problems can be prevented or kept at bay by simply pursuing a healthy lifestyle.
You may want to approach health professionals for advice about staying fit in your 40s and beyond, to fully enjoy your later years and to reduce the risk of health problems. Consulting a financial professional can also help to keep your financial health in check, and taking measures to protect your finances from being devastated by health events in your life.
If you’d like some help to ensure that you’re prepared for medical bills and that healthcare expenses won’t be a worry in the future, please do get in touch or simply schedule a meeting. I’ll be happy to see if and where improvements can be made to your financial situation, ensuring that you can look forward to a long, happy, and healthy retirement.
Investment advisory services offered through Equita Financial Network, Inc. (“Equita”). Equita also markets investment advisory services under the name Method Financial Planning, LLC. The foregoing content reflects the opinions of the author(s) and is subject to change at any time without notice.
Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct.
All investing involves risk, including the potential for loss of principal. There is no guarantee that any investment plan or strategy will be successful.