By Kate Ashford | NerdWallet
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At age 65, some couples may need as much as $413,000 to cover health care costs in retirement, according to a January report from the Employee Benefit Research Institute. That’s an extreme case, representing two people with high prescription drug costs — but it’s not outside the realm of possibility.
“It’s one of the most difficult expenses to predict in retirement,” says Nancy Nawn, a certified financial planner in Cherry Hill, New Jersey.
Your costs will depend on your insurance choices, your health, your prescription drugs and your city. (Costs are higher in some places than others.) As you approach retirement, try these tactics to get a handle on future health care expenses.
Save to a health savings account
If you have a high-deductible health plan and access to a health savings account (HSA), max it out. The money you save is triple tax-advantaged: You pay no taxes on the money you save, the interest you earn or any withdrawals used for qualified health expenses.
“I think most people use them as they go, which is fine too,” says Ed Snyder, a CFP in Carmel, Indiana. “But I think there are even more benefits to using the investment account in those [and] letting that money be invested for many years, just like a retirement account.”
In 2024, you can save up to $4,150 for an individual health savings account and up to $8,300 for family coverage. If you’re 55 or older, you can contribute an extra $1,000. (Note: You can’t save to an HSA once you’re signed up for Medicare.)
Pick the right Medicare plan
Once you’re 65, advisors typically recommend selecting Original Medicare with Medicare Supplement Insurance, or Medigap. Since Medigap plans cover…
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