Many people find that during their working years, housing is their largest monthly expense. But come retirement, healthcare might take the place of housing as the single expense you spend the most amount of money on.
As such, it's in your best interest to do what you can to make your healthcare costs more manageable. Here's how.
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1. Choose the right Medicare coverage
When it comes to enrolling in Medicare, you get a choice. You could stick to original Medicare, which is Parts A, B, and D. Or as an alternative, you could sign up for a Medicare Advantage plan.
Medicare Advantage plans often cover more services (such as dental care and eye exams) than original Medicare. But that doesn't necessarily make them a more cost-effective choice for you. You'll have to really research your options carefully to determine which is best for you.
Also, within the realm of Medicare Advantage, there may be a large number of plans to choose from in your area. Take the time to review what those different plans cost and cover. And also, look at plan ratings to get a sense of how satisfied enrollees tend to be with them.
If you decide to stick to original Medicare, consider Medigap coverage, or supplemental insurance. This could limit the amount you're forced to spend on expenses like coinsurance and deductibles.
2. Stay on top of health issues
Letting health issues escalate could not only put your wellbeing at risk, but also, cost you more money. As such, it's a good idea to keep up with doctor visits and make sure you're scheduling diagnostic tests as per your providers' recommendations.
If you'll be signing up for Medicare, you should also try to take advantage of the program's free health services. Enrollees are generally entitled to a wellness visit every year. And certain diagnostic tests are available at no cost as well.
3. Fund an HSA during your working years
You could always tap your 401(k) or IRA in retirement if you need money to pay for healthcare expenses. But when you're also trying to pay for housing, groceries, transportation, and at least some entertainment, dipping into your limited cash reserves for medical bills could become stressful.
That's why it's a great idea to have separate, dedicated savings for healthcare spending in retirement. So if you have access to an HSA, or health savings account, during your working years, do your best to fund it.
However, what you'll also want to do is leave your HSA balance alone while you're still working. HSAs don't require you to spend down your plan balance every year. Quite the contrary -- savers are encouraged to invest unused funds and grow their balances. So if you follow that path, you may end up with a large sum of money in retirement that's earmarked for healthcare spending. That could take a lot of the pressure off.
Healthcare is an unavoidable expense -- in retirement and in general. But if you make these moves, you may find that covering your healthcare costs isn't as difficult once your career comes to an end.
