by KYW's Salil Gutt
Health care has become a vital component of retirement finances. Studies have shown individuals in retirement will need almost $250,000 to cover out of pocket medical costs which include Medicare premiums and prescriptions but exclude dental expenses which are not covered by Medicare. So planning for this reality is important.
Here are a couple of things to consider.
First. Redo the numbers for the health care portion of your annual spending budget in retirement. For many of us it will be the largest expense, even more than income taxes. It will also be much higher than you expect so add in a generous cushion. And, start saving separately for health care expenses. The best vehicle to use is a high deductible Health Savings Account. The investment component permits individuals to contribute a tax deductible $2,900 annually, $3,800 if over age 55. Also, let this amount grow tax free by paying the deductibles with other cash.
The most obvious and effective solution in keeping costs down is to take care of your health.
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