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What should I do if I'm worried about healthcare costs?
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It's a fact of life that as we get older, our trips to the doctor become more frequent. And it doesn't help that the costs of healthcare in general continue to rise.
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One estimate puts post-retirement healthcare expenses at 19% of the average person's total spending. The government does offer retirees age 65 and over Medicare health insurance, but that doesn't cover everything. Fortunately, there are ways for you to fill in the gaps.
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One of Medicare's biggest shortcomings is its failure to pay for prescriptions, often a huge expense for seniors. Medigap, a supplementary form of life insurance sold by private insurers, can cover this and other holes in Medicare. There are 10 basic plans offered through Medigap, each of which has a different coverage plan and cost, so you'll want to research your options carefully.
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Another big healthcare concern in retirement is the cost of nursing-home care. It's estimated that the average stay in a nursing home costs $40,000 per year and lasts three years, which can drain a retirement fund rapidly. To protect your assets, both for yourself and your heirs, it's wise to consider purchasing long-term-care insurance, which will cover your stay in a home for anywhere from a few years to the rest of your life, depending on the plan you choose. The price of long-term-care insurance is high, but the earlier you buy it, the cheaper it comes. Experts recommend that you purchase it in your 50s, if you can afford it.
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Finally, if you retire before you turn 65, you'll need to purchase your health insurance privately, either from your former employer or an outside insurer. Be sure to set aside sufficient money to cover those costs.
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