As we age, conversation among friends leans less towards the next big job opportunity or raise, and more toward the possibility and luxury of retirement. While assuming that perhaps others are retiring early, the assumption is right. According to a USA Today report, the average age of retirement is 63-years-old in the United States. This is a two year decrease, compared to the previous standard retirement age of 65. While the average age of retirement creeps down, evidence proves that Americans are living longer than ever before. There are roughly 72,000 centenarians, people over the age of 100, in the United States. That means if you are one of those lucky enough to reach 100 years old and retire at 65 you will have 35 years of retirement.
In 35 years, you’ll most likely fulfill all of the dreams that you have pushed aside due to past responsibilities. However, that is a long time without steady income and job security. As a result, planning and saving for retirement is critical. According to the same USA Today report, a 65-year-old couple retiring today will end up spending roughly $275,000 out of pocket on healthcare costs. Furthermore, according to the 2016 Retirement Confidence Survey, 26 percent of respondents have less than $1,000 stashed away for retirement (excluding pension and home values).
Having a structured idea of when you want to retire combined with savings, and the details of both your life insurance and health insurance plans, will enhance your quality of life in retirement. The plan you build now is an investment in your future and peace of mind. What if you or your partner passes away unexpectedly? Becomes injured? Or gets very sick?
According to the Center for Disease Control and Prevention (CDC), the second leading cause of death among those 65 and older, is cancer. Cancer is painful enough for both patients and caregivers, without the additional burden of medical costs and treatments can add tremendous financial burden on loved ones. In 2014, cancer patients paid nearly $4 billion out-of-pocket for cancer treatments, affecting a large marjority of senior audiences. Cancers found most often populations aged 65 and above, include: colorectal cancer, breast cancer, prostate cancer, lung cancer and mesothelioma.
Colorectal cancer is a cancer that starts in the colon or the rectum. The lifetime risk of developing colorectal cancer is about 1 in 21 or 4.7 percent for men and 1 in 23 or 4.4 percent for women. This cancer is the third leading cause of cancer-related deaths in women in the United States and the second leading cause in men.
Breast cancer is a group of cancer cells that form in the cells of the breast. Studies have shown that your risk for breast cancer is due to a combination of factors, however simply being a woman with advanced age increases your chances of developing breast cancer. In the United States, the average age of women diagnosed with breast cancer is 61-years-old.
Prostate cancer is one of the most common cancers in men in the United States. The older a man is, the greater his risk for developing prostate cancer. In addition to age, family history and race also impact your chances of prostate cancer.
More men and women in the United States die from lung cancer than any other type of cancer. Cigarette smoking is the number one cause of lung cancer, so the most important preventative action you can take to lower your risk of lung cancer is to quit smoking. People who have smoked for many years may want to consider screening for lung cancer with low-dose computed tomography (LDCT).
Mesothelioma is an aggressive yet preventable form of cancer that develops when airborne asbestos fibers are inhaled and embedded into the lining of the lungs, abdomen, or heart. Mesothelioma has an extremely long latency period and can take anywhere from 20 to 50 years before the first signs or symptoms of cancer present themselves. Symptoms for this type of cancer are similar to more common viruses like a severe cold or the flu. As a result, by the time mesothelioma is accurately diagnosed, prognosis is typically poor with less than a year to live.
Although the cancers described above take toll on the older communities, advanced age does not mean a guaranteed cancer diagnosis at your next trip to the doctor. The likelihood of developing cancer can decrease through implementing risk-management measures like a healthy diet, regular exercise, avoiding substance abuse, and routine doctor’s visits. The latter is especially important if you are a smoker, or if you have been exposed to hazardous materials, such as asbestos.
Here is how it works; you pay an annual premium – determined by the insurance company – for the term of the policy which is usually 20 years, but there are other options. If you pass away within those 20 years, your beneficiary will be able to collect the specified amount on the policy. For instance, say you were to purchase a $1 million, 20-year term policy with a premium of $600 per year. If you pass away within the 20-year period, your beneficiary will receive $1 million, completely tax-free.
Why is This Important?
If you or your partner were to pass away from an illness such as cancer, someone will have to pay off all debt left in your wake – usually the next of kin. The average cost of funerals alone are upwards of $8,000 to $10,000. Securing a life insurance plan protects those you love because it ensures that they have financial supports in place after you pass.
Although discussing life insurance is not the most exciting conversation, when you take the time to explore life insurance, it becomes evident that a solid plan is essential for protecting yourself and your family. A life insurance plan also makes financial sense. As a financial asset, it helps to increase your credit and help you to obtain a loan or health insurance. Last, if you find yourself in a plan that you no longer want or need, you can always sell your policy and receive the extra funds.
In addition to considering your life insurance plan, it could be in your best interest to evaluate your health insurance plan prior to beginning retirement. Even if enrolled in an employer health insurance plan, which is great for the time being, once you retire you will want to choose a new plan that meets your retirement needs.
Health insurance plans are critical when it comes to keeping your healthcare costs low, especially during retirement. When comparing policies, consider the premium or expense to buy the policy which is often paid monthly; the deductible or out-of-pocket costs for care; copayments which are usually a flat rate per visit or service; the network or health care providers that accept the insurance policy; and the coverage, the type of care covered.
You might also want to investigate your eligibility for a health savings account, also known as an HSA. This account is a great option for those who expect higher medical bills and therefore decide to pay a higher premium for lower out-of-pocket costs for medical appointments. The money deposited into an HSA is tax-free, and can be used for medical expenses.
However, sometimes the best insurance and a concrete plan still isn’t enough. For instance, in the case of cancer, treatment costs can be outrageous. There might come a time when it’s in your best interest to research advocacy options to help fund your costs. In the case of mesothelioma for example, seeking legal advice could help cover your some of your medical expenses.
How to Proceed
Starting to plan for retirement is an exciting time. In addition to fantasizing about checking things off your bucket list, be sure to take some time to truly understand where you are financially and how well you’re prepared and covered, in the event that something were to happen to you or a loved one.
It is important to recognize that aging is inevitable, and therefore certain measures need to be taken to ensure a healthy future and prevent cancer as cancer is the second leading cause of death in the seniors. Reviewing your current life insurance plan or exploring alternatives to standard life insurance options is just as important. If you were to pass away tomorrow, you want to make sure that your family and those you love are well taken care of.
Whether you’re a full-time employee or newly retired, be sure review your current health insurance policy. As your life changes, you may need a new health insurance plan that can better meet your needs and circumstances. Investigate health savings accounts for a tax-free option and lastly, if you do find yourself in a sticky financial situation due to medical costs, don’t be afraid to seek out legal advice.