TD Wealth recently released a survey of estate planning experts who report that health care costs are now the biggest threat to estate planning. While only 7% of estate planning experts reported this information in 2019, 22% of estate planning professionals cited health care costs as at the forefront of estate planning concerns. Additionally, concerns about market volatility rose substantially from last year. Family conflict fell from 25% in 2020 to 10% this year. Over the course of previous years, TD Wealth reported that the most common cause of family conflict was the failure to communicate estate plans with family members. The number of family conflicts fell substantially in 2021. The study also reported that 89% of estate planners reported female clients losing jobs, leaving the workforce, or facing salary cuts due to the pandemic. As a result, a large number of female clients made changes to their financial situation. Women have been negatively impacted more than men due to the COVID-19 pandemic.
Prepare for How Much You Will Need in Health Care Costs
An average retired couple age 65 in 2021 needs approximately $300,000 saved after taxes to cover health care expenses that they face during retirement. This amount, however, can vary substantially based on when you retire as well as your health later on in life. The sooner that you can prepare a plan for how you will pay these costs, the better. The amount that you need also depends on what type of financial accounts you use to pay for your healthcare.
Don’t Forget about Medicare
As you approach the age of 65, you should spend some time reviewing your available Medicare options. When you become
eligible at the age of 65, you should remember to sign up during the enrollment period that begins the three months before you turn 65. It helps to understand that Medicare Parts A to D as well as Medicare Advantage and Medigap each help to pay for various types of care that individuals receive. Remember that even after you select a Medicare plan, the plan does not last forever. Instead, it’s possible to switch between Medicare plans as you grow older. If you retire before the age of 65, you should also make sure to have health insurance before you become eligible for Medicare including private insurance, COBRA, or employer retiree insurance.
Utilize Your Health Savings Account for Future Costs
Provided you’re eligible, a health savings account can help you to save pre-tax dollars to pay for qualified medical costs. Money placed in a health savings account also grows without being subject to taxes. Provided you later use these savings for qualified medical costs, you will not owe taxes on them. Remember, at the age of 65, it will no longer be possible to contribute to your health savings account.
Speak with an Experienced Elder Law Attorney
Healthcare is just one of countless obstacles that people encounter while navigating elder law issues. If you or your loved one needs the assistance of an experienced estate planning attorney, do not hesitate to contact Ettinger Law Firm today to schedule a free case evaluation.