Are you approaching retirement? Have you developed a projected retirement budget? If not, now may be the time to do so. It’s an important financial tool that can help you manage your spending and preserve your retirement assets. You can use your budget to plan for a wide range of expenses, such as housing, utilities, taxes, travel and more.
One expense that should be included in your budget is health care. Many retirees assume that Medicare will cover all of their health care expenses. The truth is there are many medical expenses that aren’t covered by Medicare. In fact, Fidelity estimates that the average retired couple will spend $275,000 on out-of-pocket medical expenses.1 That figure doesn’t even include the cost of long-term care.
Risk management is always important, but it’s an even greater priority in retirement. Without the benefit of a regular paycheck, it could be difficult to bounce back from market downturns or costly emergencies. One sizable setback could be enough to derail your retirement plans.
One major risk you shouldn’t ignore in your planning is the impact of health care costs. Fidelity estimates that the average married couple will spend $275,000 on out-of-pocket health care expenses in retirement.1 That figure doesn’t even include long-term care, which can cost thousands of dollars per month and may be needed for several years.
The good news is there are steps you can take to reduce your risk exposure and protect your retirement. Below are three such steps to consider. If you haven’t yet developed your retirement risk management strategy, now may be the time to do so.