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Retirement Q & A

Answers to Common Health Benefits and Financial Questions from FPA

If you've recently changed jobs, started a family or are sending children off to college, planning for retirement may not be top of mind, but it should still rank among your priorities. While you may feel that it's important to spend money on your children or family instead of your retirement, they will feel better knowing that you will be more secure in your retirement plans.

Lifestyle, income and many other external factors impact when and how much one can contribute to one's retirement savings. CERTIFIED FINANCIAL PLANNER (CFP®) professional, Jonathan Guyton of the Financial Planning Association® (FPA®) offers answers to some common retirement questions.

When should I start thinking of saving for retirement?

Right away! The biggest challenge people talk about is saving for retirement early or jumpstarting your savings as needed. Ten or 20 years ago, people didn't start thinking about retirement as early as they do now, but recently there has been positive peer pressure to start contributing to your 401(k) or Individual Retirement Account (IRA) by your mid-twenties. Because companies often match your contribution, it's wise to start saving as soon as possible. If you do not have a company-matched contribution fund, consider opening and regularly adding to either a Roth IRA or Traditional IRA. For more information about opening an IRA, contact a CFP® professional, your bank or an investment management company.

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How concerned should I be about health benefits coverage during retirement?

Health benefits are worth thousands of dollars and protect you against financial risk in case of illness or accident. It is easy to take health benefits provided by an employer for granted. Unless your company provides full retiree health benefits, once you retire, you'll need to figure out how to cover these costs or a portion of them on your own, including monthly premiums, co-payments and other out-of-pocket health expenses in your retirement budget. If you retire before age 65, look into individual plans offered by insurers, or through different community organizations. Even if you're young and healthy consider options that qualify you to open a Health Savings Account (HSA). This type of account allows you to save now, tax-free for a time when you will have higher out-of-pocket medical expenses.

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What are my health benefits options if I retire before age 65?

According to the Consolidated Omnibus Budget Reconciliation Act (COBRA), your employer must make coverage available for up to 18 months if you retire before turning age 65. If you retire before age 63 1/2, evaluate your health coverage needs, including doctor visits, prescription drugs, and potential long term care coverage. Then consider purchasing an individual health plan from your insurer or professional/alumni association you belong to, or look at groups that offer health plans, such as the Chamber of Commerce. You may also consider working part-time as some employers offer benefits to employees who work a minimum number of hours each week.

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What are the new Medicare prescription drug options for someone retiring at age 65?

As of 2006, if you are older than age 65 and have Medicare, you are eligible for Medicare Part D. Medicare Part D (Medicare Prescription Drug Coverage) helps cover the cost of prescription drugs. Most Medicare Advantage plans (such as an HMO or a PPO) already provide Medicare Part D prescription drug benefits to recipients at an additional cost.

Join a Medicare prescription drug plan as soon as you are eligible (for more information on Medicare, see Health Care Options After Retirement). If you wait, you may pay a penalty to join later. Plans vary by cost, number of drugs covered and pharmacies you can use, but all plans must meet a minimum standard for drug coverage that is set by Medicare. Work with your doctor, a Medicare health plan provider or a CFP® professional to find the Medicare Part D plan that best meets your prescription drug needs.

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Can I rely on my employer for health benefits after I retire?

Find out from your human resources department or company benefits website whether or not your company offers retiree health benefits. Then find out the details of your retiree benefits package. Be aware that some companies are trimming benefits or doing away with them altogether for future retirees. If you are not employed, but your spouse is considering retiring, ask about any spousal benefits his or her employer may offer. Become informed about your health benefits options, such as purchasing individual or group coverage on your own, and plan for out-of-pocket health care costs.

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I have been self-employed for many years and would like to retire at age 60. What are my health benefits options?

If you retire five years before Medicare coverage becomes available to you, at age 65, you should evaluate other health benefits options. Since you are self-employed, talk to your individual health plan provider about extending your benefits into retirement. You may also consider purchasing an individual health plan from a professional/alumni association you belong to, or look at groups that offer health plans, such as the Chamber of Commerce or AARP. Some retirees choose to work part-time as a number of employers offer benefits to employees who work a minimum number of hours each week.

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I am not currently employed. How can I begin planning for retirement?

If you are married, you and your spouse should begin retirement planning together by reviewing your health benefits and financial needs. Find out what kind of retirement benefits your spouse's employer offers including health benefits after retirement or a pension.

If you are single, have previously worked and paid Medicare federal taxes for at least 10 years, Medicare Part A health benefits will become available to you, premium-free, when you reach age 65. If you are married and your spouse has worked and paid Medicare taxes, you will receive the same Medicare benefits. If you do not qualify for Medicare without a premium, you can still purchase Medicare Part A coverage at age 65.

If your spouse plans to retire before age 65 you may consider purchasing an individual health plan. COBRA offers coverage for up to 18 months before you turn 65. Another option is to purchase an individual health plan from a professional/alumni association you belong to, or look at groups that offer health plans, such as the Chamber of Commerce or AARP.

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Will I be able to get Medicare health benefits once I reach age 65?

Medicare is a government supported health insurance plan. If you have paid for Medicare through taxes while working, you will be enrolled for Part A coverage (for hospital costs) at age 65, free of charge. Part B coverage (for doctors' fees) will become available to you for a monthly premium. While Medicare covers certain basic medical expenses, it does not cover everything. For example, it does not typically pay the total cost of covered services or supplies. Many people purchase Medicare Advantage (Part C) plans and/or Medicare prescription drug coverage plans (Part D) from health insurance companies to help offset expenses that are not covered by Medicare. Become informed about Medicare and plan for out-of-pocket costs.

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Do I need to purchase life insurance?

Purchasing life insurance is a way to protect loved ones from a financial pitfall when you pass away. It can be used to cover funeral expenses, pay off a mortgage, fund a child's education, pay taxes or supplement your family's income. Deciding on how much life insurance to buy depends on your age, the ages of your family members, your lifestyle and your debts. For more information talk to a CFP® professional, because setting up your life insurance policy correctly can mean the difference between your family inheriting all of your retirement investments and the government getting a considerable amount of your hard-earned savings.

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As a woman, are there any special needs I should keep in mind as I plan for retirement?

On average, women tend to live longer than men, and experts say they are 50 percent more likely than men to need long term care. Because of this, married women should be involved in all aspects of retirement planning and budgeting of the couple's pensions, Social Security and savings, as well as their long term care options. Couples should especially consider purchasing a long term care policy in the older spouse's name to preserve their savings. For more information on long term care coverage, see Making Sense of Long Term Care.

The North American Menopause Society expects there to be more than 50 million postmenopausal women in the U.S. by the year 2020. As postmenopausal women head into retirement, they should be aware of special health and dietary needs. The Centers for Disease Control and Prevention recommends women keep up-to-date with health screenings such as mammograms and colorectal cancer tests. Women experience an increased risk for heart disease, osteoporosis and certain types of cancer. This is a time when a diet rich in fiber and calcium, along with plenty of exercise, can improve your overall health.

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What if my spouse and I don't retire at the same time?

Couples in this situation have a unique opportunity to receive health benefits coverage from the working spouse's employer, if offered. When planning for retirement, base your timeframe on the younger spouse. Both spouses should be involved in benefits planning, in case one spouse dies, the other can be well informed to make sound financial decisions for their future.


If you and your spouse both work, discuss when to start taking Social Security Retirement Benefits. It is often best for the spouse with the smaller Social Security check to begin taking benefits earlier, around age 62, and the other spouse to wait until age 65 or 67. When one spouse dies, the other spouse keeps only one check, but it doesn't have to be his or her own; it can be the larger of the two checks.

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Do I need a financial planner?

A CFP® professional offers knowledge and professional experience that can make planning easier and more effective. While a CFP® professional cannot predict your financial path, they can advise you on how to respond to events during your retirement journey. In addition, while not everyone can afford to use a CFP® professional, many local Financial Planning Association (FPA) chapters conduct free seminars on retirement planning. Financial Planning Association's online tool, PlannerSearch can help locate a CFP® professional near you.

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