As people approach retirement, finances are often on the brain. From social security benefits to savings, there are a lot of costs to consider. The biggest question is always, “Will I really have enough?” Even after a lifetime of saving, many seniors wind up under-insured or struggling to get by. With inflation rates and a higher cost of living, it’s important to plan ahead and give yourself as much security as possible. Two areas you will want to address early on are health and life insurance. Both of these play a key role in your wellbeing, and they can bring you and your family peace of mind as you age and your medical needs change.
Is Medicare Enough for Retirement?
Medicare can be complicated, so we will break it down easily for you here. There are four parts to the program:
- Part A: Hospital Insurance
- Part B: Medical Coverage
- Part C (Optional): Private Alternative to Original Medicare (A and B)
- Part D (Optional): Prescription Coverage
Part A and B make up what is known as Original Medicare, but it often isn’t sufficient for senior healthcare. Most people will purchase a Medicare Advantage bundle package from a private insurance company. As a Part C plan, this tends to combine Parts A, B and D into one policy. You may have lower out-of-pocket costs and will have a provider’s network to access care, just like you would with a standard health insurance policy. All Medicare recipients must pay for Part B. The average premium for Part B can be upwards of $150. This figure can change depending on your income level and social security benefits. Medicare Advantage plans had an average premium of $25, but prices can vary from $0 to over $100 depending on your provider.
How Much Life Insurance Does a Senior Need?
How much life insurance does a senior need? You may be surprised to learn that seniors can benefit from life insurance coverage as just as much as younger adults with dependents. You may look for a whole life insurance policy with a small death benefit of $10,000 to $30,000. This can be used to pay for funeral expenses and any outstanding debts you have at the time of your passing. It can also be used for families to settle your estate and reallocate your possessions after your death.
However, there is another important factor to consider when it comes to the type of policy you purchase. You should opt for a whole life insurance plan that accumulates a cash value so you have the option of selling it for a viatical settlement if you need it. Viatical settlements are used to pay for care and medical bills after a person is diagnosed with a terminal illness. You can read a guide on everything you need to know about viatical settlements to plan for your future.
Choosing Coverage vs. Cost
There will have to be a balance between the benefits you receive and how much you can afford. For many seniors, it’s natural to opt for the cheapest package so they can keep as much of their income free as possible. While this is a good idea for someone in excellent health, it is wise to be proactive. Think of your health insurance as a preventative investment rather than an immediate bill. While you may be fortunate enough to enjoy perfect health through your senior years, you should still have adequate coverage if you ever need a specialist, surgery or prescription medication.