You probably visualize some of the most positive aspects of retirement as being able to spend more time on your hobbies, visiting with your family members, or traveling the world.
But don’t forget about the possibility of big expenses that could hit you or your loved ones harder as you enter older ages. These are not optional payments and they are not fun either. These big expenses should be factored into your long term plan. These major expenses include health care, taxes, and long term care.
Medicare doesn’t pay for all of your care once you turn 65 and far too many seniors make the mistake of falling for this myth. Medicare doesn’t cover hearing aids, eye exams and glasses, and dental care, for example, and there are plenty of gaps in Medicare prescription drug coverage that warrant your attention as well.
Taxes are another issue to consider if you’re going to be taxed on distributions from non-Roth accounts. You’re likely to be taxed on these at ordinary income tax rates which could generate significant IRS bills and you could also be paying taxes on a certain portion of your social security benefits.
Your retirement nest egg might seem big enough but you if you haven’t planned ahead for taxes, you could be in for an unfortunate surprise. Finally, baby boomers and others approaching retirement can’t afford to forget about long term care.
If you or your spouse need home health care or nursing home services, you could decimate your retirement savings account without proper planning for Medicaid.
Working with a Pasadena estate planning lawyer to ensure that you have a Medicaid plan in place to protect your assets can give you peace of mind that your spouse will still be able to care for themselves if something were to happen to you.