Broker Check

Are You Prepared for The Costs of Retirement?

October 12, 2022

Healthcare is one of the largest expenses for people in retirement, but it’s not easy to budget for them. Sometimes, accidents happen, or certain health-related concerns can come out of nowhere. Because of how difficult it can be to predict; it can be just as difficult to plan for it. But luckily, there are tools out there that help you save on healthcare costs and protect your budget against a sudden, unexpected healthcare expense.

If you have a high-deductible health insurance plan, Health Savings Accounts (HSAs) can be an important piece of your healthcare puzzle. These are individual retirement accounts that can be contributed to for the purpose of spending on healthcare needs in retirement. Any qualified health expense is completely tax-free, and after 55, you can use your holdings for any expense penalty-free and tax-free.

Permanent life insurance can be another option for paying for unexpected costs in retirement such as health-related expenses. This is because permanent life insurance not only provides a death benefit, but it also builds cash value as you pay into it that can be withdrawn or loaned against to cover costs. Note that when you withdraw cash value, the death benefit will decrease by the amount you withdraw.

For an additional fee, you can sometimes add riders, or add-ons, to an annuity that is aimed at helping cover a personal or financial risk. An inflation annuity rider can help pay for the unexpected event of increased inflation. As we’re seeing now, inflation can be a factor in market downturns and can tighten our budgets. But it’s hard to predict if and when inflation may occur. That’s why an annuity rider that adjusts its payout amount based on inflation levels can help protect against the unexpected cost of inflation.

Long-term care annuity riders can also help you cover the costs of long-term care coming at an unexpected time. If an illness, injury, or disability emerges, receiving long-term care, whether in-home or in a facility, can pose a major burden to your budget. With an annuity rider for long-term care, the cost of this expense can be reduced.

In addition, disability or illness riders can kick in, paying out distributions over time or a lump sum if you become disabled or experience a qualified illness. Usually, qualified disabilities or illnesses are ones that prevent you from working.

If an unfortunate event happens, it can pose a major cost that can seem difficult to overcome without the proper protection. That’s why it’s important to know of and utilize the tools out there to protect your finances against unexpected costs.


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This document is for educational purposes only and should not be construed as legal or tax advice. One should consult a legal or tax professional regarding their own personal situation. Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products offered by an insurance company. They do not refer in any way to securities or investment advisory products. Insurance policy applications are vetted through an underwriting process set forth by the issuing insurance company. Some applications may not be accepted based upon adverse underwriting results. Death benefit payouts are based upon the claims paying ability of the issuing insurance company. The firm providing this document is not affiliated with the Social Security Administration or any other government entity.