Importance Medical Expenses when you plan for your retirement
If you wants to build a retirement corpus and believes that you have estimated your future expenses correctly. Though you thinks you will amass adequate corpus for retirement, still your are worried about the medical costs that you may incur in old age and is not sure if you have made the required provisions for these. Besides, you does not want to depend on your children in your retirement years. What should you do to ensure that you are not short of funds for your medical needs?
Like most people, you are also unable to foresee the health-related complications and the resultant costs that may arise as you grows older. So you may end up underestimating the medical cover required after retirement. This may lead to a bigger portion of the retirement income than you had intended going towards meeting medical expenses. It could even create a shortage in income at a time when there are no options to supplement it.
You can protect your retirement income if you keeps the following points in mind. A good financial planning move will be to consider medical costs as a separate head and not combine these with living expenses for retirement savings. It will give this expense the focus it requires. While estimating the future value of medical expenses, a higher rate of inflation should be considered since health-related costs tend to increase at a faster pace.
The expenses you must include are those for medicines for illnesses related to old age, specific illnesses if there is a family history, hospitalisation cost, cost of surgery and that of specialised care. While some of these may be covered by the health insurance policies available, the premium will be high at that age and there will be expenses that are excluded or subject to an upper limit.
While the insurance options available for the elderly are limited, the entry, costs and the policy renewal becomes easier if there is an existing policy. So, you must consider taking a medical insurance cover for himself and his spouse as you gets closer to retirement and establish a history of uninterrupted health cover.
Once you have a better idea of the health cover premiums and other costs, an annuity can be bought with a portion of the corpus created. This will offer the comfort of an assured payout to meet the expenses. The rest can be held to meet unexpected and uncovered expenses, if any.
Best Regards
Prakash Nair
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