Health Care for All, Including Celestial Bodies: The Retirement Planning Lessons from Venus Williams' Journey
In the journey towards retirement, one aspect that often requires careful consideration is healthcare coverage. Derrick Longo, a wealth advisor at Exencial Wealth Advisors, emphasizes the availability of options for state subsidized insurance, COBRA, private insurance, and employer-sponsored plans during retirement.
For those who are single or earning within certain income brackets, qualifying for subsidies for Affordable Care Act (ACA) coverage can be a viable option. In the contiguous United States, a single person earning up to $62,000 per year or a family of two earning up to $84,000 per year can take advantage of these subsidies.
If you're married and one spouse continues to work, enrolling in their employer's health plan is often the cheapest option for healthcare coverage during retirement. However, if you find yourself retiring earlier or your spouse doesn't have health coverage, you may need to consider private insurance.
Venus Williams, the oldest woman to win a WTA singles match since 2004, is a testament to the importance of planning for healthcare costs during retirement. In her case, the need to return to tennis was driven by the necessity of health insurance.
Healthcare expenses in retirement can be substantial. Fidelity estimates an average of around $172,500 in healthcare and medical expenses throughout retirement for someone retiring at age 65 in 2025. This estimate excludes long-term care costs, which can be substantial, with nursing home stays costing nearly $11,000 per month on average and in-home care adding thousands more annually.
Before becoming eligible for Medicare at age 65, retirees have several options for health insurance. These include COBRA continuation coverage, ACA Marketplace plans, Medicaid (based on income), spouse’s employer plan, retiree health insurance from your employer, and private insurance or short-term plans.
It's crucial to plan for potential long-term care costs, as Medicare does not cover these adequately. Many retirees underestimate these costs, which can lead to significant financial strain.
In summary, comprehensive retirement health expense planning should consider average medical and prescription drug costs, additional premiums and out-of-pocket expenses, potential long-term care costs, and early retirement insurance options. Regardless of the type of health insurance you choose, it's important to plan for your coverage before you retire.
Fidelity estimates a 65-year-old may need $165,000 in after-tax savings to cover healthcare expenses in retirement (as of 2024). With COBRA, you usually pay full price for your employer's health plan, which can be "prohibitively expensive." However, it's important to note that the cost of the plan through the Affordable Care Act will depend on your age, where you live, and your income.
New retirees who stop working usually have a 60-day window to enroll in a new health plan through the Affordable Care Act. Medicare covers about 80% of health care costs, but retirees should be aware that collecting Social Security before your full retirement age can result in up to a 30% reduction in benefits.
The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows workers to keep their employer-sponsored health insurance for a period of time after terminating a working relationship. The period for COBRA is typically 18 months, but can last for 36 months according to Whitney Stidom.
Planning for healthcare coverage in retirement can be a daunting task, but understanding the available options and preparing financially can provide peace of mind and ensure a secure retirement. Venus Williams' return to tennis highlights the importance of this planning, underscoring the need for all retirees to consider their healthcare costs carefully.
- Derrick Longo, a wealth advisor, highlights the availability of options for state-subsidized insurance, COBRA, private insurance, and employer-sponsored plans during retirement.
- Venus Williams, the oldest woman to win a WTA singles match since 2004, emphasizes the importance of planning for healthcare costs during retirement.
- Fidelity estimates an average of around $172,500 in healthcare and medical expenses throughout retirement for someone retiring at age 65 in 2025.
- With COBRA, you usually pay full price for your employer's health plan, which can be "prohibitively expensive."
- In the contiguous United States, a single person earning up to $62,000 per year or a family of two earning up to $84,000 per year can take advantage of subsidies for Affordable Care Act (ACA) coverage.
- Comprehensive retirement health expense planning should consider average medical and prescription drug costs, additional premiums and out-of-pocket expenses, potential long-term care costs, and early retirement insurance options.
- Medicare does not cover long-term care costs adequately, and many retirees underestimate these costs, which can lead to significant financial strain.
- Planning for healthcare coverage in retirement can be a daunting task, but understanding the available options and preparing financially can provide peace of mind and ensure a secure retirement.
