When preparing for life after retirement, most people think about what they are going to do with all their new-found free time. They think about planning vacations, heading south for the winter, spending more time with family or taking up new hobbies.
One of the last things they often think about is falling ill and paying for health care, treatments and medication. However, this is one of the realities of aging, and it’s important to factor in the costs of medical care when you retire.
Factor health and medical costs into retirement planning
If you do not plan accordingly, health care costs can creep up on you and can significantly limit your retirement spending. It’s important to factor in medical costs and private health costs into your retirement planning now, so that you don't get caught off guard in the future.
“These expenses do show up and typically they’re unaccounted for,” says Jeff Schwartz, executive director of Consolidated Credit Counseling Services of Canada, in the Financial Post. “We do hear that medical issues end up putting our more senior clients into debt,” he adds.
It’s clear that Canadians are aware of the potential health care costs as they age. A BMO Wealth Institute report from July 2014 found that the Canadians polled view medical and health costs as the biggest expense after they retire. The survey found that “Canadians expect to spend an average of $5,391 a year in out-of-pocket medical costs after the age of 65.”
Why do so many Canadians shy away from this very important type of financial planning? Many people don't want to think about worst-case scenarios with their health. No one wants to think about the possibility of getting a chronic illness or disease, but it is a reality we need to plan for to ensure we have access to the medical care we need without putting our finances at risk.
Health insurance offsets medical costs and financial risk during retirement
Private health insurance is a worthwhile investment. After people retire and no longer have access to their group benefit plans, and when they reach their coverage limits through OHIP, private health insurance can provide the peace of mind in knowing there is coverage for routine medical expenses and, more importantly, for unexpected medical conditions.
When you choose a policy, you will know what your health insurance covers and how much money you will need to set aside each month to pay your health insurance premium. Planning for unexpected medical expenses now can help you transition into retirement knowing you are covered, allowing you to enjoy the retirement lifestyle you have planned for.
Learn more about Blue Cross health insurance for retirees.