Why & How to Plan Ahead for Health Care Expenses

Health care is something that most Americans overlook when budgeting. Medical debt child with nursecan get out of control if you don’t have health insurance or you don’t plan ahead for unexpected health care expenses.

But how do you plan ahead for health care expenses?

Here are a few tips that can help you start the planning process:

  1. Research health insurance plans and medical costs. To plan ahead for your health care expenses, you will need to understand what type of health insurance plan you have and the medical costs that you may incur in the upcoming year.
    • Determine how much to save based on your deductible, co-payments/co-insurance and/or out-of-pocket maximums. You can contact your health insurance provider to find out the amount of your deductible.
    • Estimate how much to save based on any medical bills you received in the previous year.
    • Calculate how much to save based on any prescriptions you had to pay for in the previous year.
    • Attend workshops and seminars presented by your employer or health insurance organization to get a better understanding of how to get the most out of your health insurance plan (and spend the least amount of money out of your own pocket).

Everyone’s situation will be different. Use what you think will be best for you to determine how to save money on your health care costs.

  1. Start the planning and budgeting process. A best practice is to use a budgeting tool to outline all of your monthly expenses, including any estimated health care costs. A visual map of your financial plan will give you something to follow to ensure you are meeting your savings targets every month.
  2. Consider Opening a Health Savings Account (HSA) or Flexible Spending Account (FSA). These enable you to save for health care expenses in advance (on a pre-tax basis). Not only are the funds untaxed, they can also be used to cover the cost of co-payments, co-insurance, out-of-pocket maximums, and prescriptions.

The Bottom Line: You’ll Save Money in the Long Run

Ultimately, planning ahead for health care expenses is like planning ahead for retirement. With retirement, you plan ahead to cover all of your bills in the future. The same concept applies for health care expenses. The money you save will enable you to cover the costs of any medical expenses you incur in the future.

Courtesy of Accel Members Financial Counseling, Destinations Credit Union’s partner to provide its members free unlimited financial counseling.

Single At Retirement


Most of the retirement advice out there is for people “growing old together.” What does a person need to do to plan for a fabulously single life after work?
Take a look at nearly any retirement guide, and there’ll be a section on what to do with your spouse’s income and savings. If you don’t have a spouse, there are several benefits you won’t have: spousal Social Security benefits, life insurance payouts and equity, and preferential tax treatment for married couples. It can seem like the deck is stacked against you.
Regardless of why you find yourself planning for a single retirement, whether it’s death, divorce or just not meeting the right person, you’re not alone. According to the US census, 54% of men and 27% of women over age 65 are single. They’ll face a much more difficult retirement landscape than their married counterparts.
That doesn’t mean you need to find the first available partner to get hitched, though. There are many strategies that are easier for single people to execute than their married counterparts. Here are three steps you can take to make your retirement years safe and secure.
1.) Start saving now
One area where single people lag behind married couples is in retirement savings. More than 40% of unmarried women and 34% of unmarried men have saved less than $1,000 for retirement. There may be any number of reasons for this, but the bottom line remains the same: Start saving more.
It may be helpful to start small. Try a dollar-a-day saving challenge by saving one dollar every day for 30 days. Use that money to start or add to a tax-advantaged retirement account like an IRA. After 30 days, one dollar every day will start to feel like a habit and it’ll be easier to add more to it.
Beyond putting more money away, single retirement may require a more cautious retirement plan. You may need to work longer to achieve the same level of security in retirement. For most people, the years they work just prior to retirement are their peak earning years. A few more years at your max salary (and max savings rate) can add up quickly!
2.) Choose your accounts wisely
There are a few common retirement situations that put single people at greater risk. These risks mean that you’ll want to prepare a little differently than married couples. Most notably, single people have less support and flexibility if they start outliving their savings. For married couples, the larger pool of assets and supplemental income streams help to keep this from being a serious worry. Singles don’t have access to these benefits, so they need to be more careful in their selection of retirement vehicles. Looking to guaranteed sources of income, such as lifetime annuities and defined benefit plans, can help alleviate these concerns. While these investments may have a place in every portfolio, the additional security they provide to single people makes them especially useful.
Also, major medical problems pose a more significant challenge. Instead of having to depend on a partner to take care of you if you require long-term care, you may need professional assistance. This might come in the form of either in-home care or a residential facility. Long-term care insurance, though expensive, can be an excellent way to protect yourself against these costs. Similarly, keeping a robust Health Savings Account (HSA) can help save on taxes now and pay for medical expenses later.
3.) Take advantage of the opportunities
While being single in retirement does pose a number of challenges, it also opens up a number of exciting opportunities. For example, there’s no reason why your retirement years have to be in the same community where you worked. You can take advantage of your new lifestyle to move to a place with a lower cost of living, thus extending your retirement savings.
There are also many bridges to retirement that are available to singles that may not be as desirable for married couples. Starting a small business using your workforce skills can put you in a position to maximize your tax benefits while also bolstering your income over those early retirement years. Whether it’s in consulting, freelancing, or something unrelated to your career, you can put your skills to work pursuing your passions.
Since there’s no guaranteed inheritance outside a marriage, your estate planning has many more options. You don’t have a partner depending on your assets when you’re gone, so you can dedicate your remaining savings to a cause that’s important to you. You’ll want to set up an estate plan that reflects your values and commitments, and you have the opportunity to do just that.
If you’re ready to take the next step in your retirement planning, you owe it to yourself to see what benefits are available to credit union members. Call, click, or stop by Destinations Credit Union today!
YOUR TURN: What are you most looking forward to in retirement? How do you plan to make that dream a reality? If you’ve already retired, what tips do you have for the next generation?