Are You Covered Correctly for a Texas Retirement? Insurance You Need and Don't Need
When you retire in Texas or any place for that matter, you’ll soon discover that some of your expenses will go down, and you may need less of things, like work clothes and dry cleaning services, morning trips to the gas station to fuel up for your commute, payroll taxes, and 401(k) contributions.
But you might also be surprised to find that there are some expenses that may go up, and things you’ll need more of in retirement, like things to do, recipe ideas to make more meals at home, and, possibly, insurance.
We’re not just talking about health insurance here, although of course, that’s a big one. You’ll also need to consider long-term care insurance and a few other types of insurance. We’ll also talk about types of insurance you may not need in retirement.
Financial planning and insurance planning often go hand in hand, read on for more information about insurance needs during retirement!
There’s a good chance your healthcare costs will increase once you retire since you won’t be participating in your employer-sponsored insurance plan anymore.
If you are 65 or older, you are eligible for Medicare, which is the federally administered primary health insurance provider for Americans. You’ll be automatically enrolled when you turn 65.
The basic Medicare coverage, known as Part A, really only covers hospitalization. It does not cover dental care, vision screenings or eyeglasses, doctor visits, hearing aids, or prescription drugs.
Planning on retiring in Texas? contact the team at pax financial group to see how we can help you make the transition.
There are Medicare extensions you might consider for those things that Medicare Part A does not cover. Medicare Parts B, C, and D each have an additional cost. Part B covers things like doctor visits, outpatient care, and certain preventive costs; Part C is an alternative to Parts A and B; and Part D is a prescription benefit.
If you’re not old enough to qualify for Medicare, you will have to purchase your own insurance coverage through the Health Insurance Marketplace.
You do not want any gaps or lapses in health insurance coverage. It’s estimated your healthcare costs in retirement will be nearly $300,000, a figure that continues to rise.
Another thing Medicare does not cover is long-term care, and although there isn’t a Medicare extension for long-term care, there are insurance policies that would help cover long-term care expenses.
If you’re young and healthy you might not think you’ll ever need long-term care insurance, but the statistics are against you: About 70 percent of Americans will require some type of long-term care for illness or injury, at some point in their lifetimes.
And if you need it, you’ll be glad you have some help to pay for it, because the average cost of long-term care ranges from about $55,000 for a home health aid to over $105,000 for a room in a private nursing home.
One important note: long-term care insurance will not provide coverage for a pre-existing condition, so you must buy a policy before you need it.
Insurance for Business Owners
If your retirement plans are to sail off into the sunset or enjoy spending your days with your grandchildren, you can probably skip this section and go straight to the next.
But if you decide to turn a hobby or side-gig into a business after you retire, you’ll probably have to look into business insurance. Although most commercial insurance is optional, you may be required to have certain types of coverage, like worker’s compensation or liability insurance, depending on the type of business and your location.
Probably the most common business insurance is a business owner’s policy (BOP). BOP insurance packages property and liability insurance in one policy, for small- and medium-sized businesses, to cover bodily injury or property damage.
Natural Disasters that Texas is Known For
If you own a home in an area that is prone to natural disasters or severe weather, such as hurricanes, tornadoes, flooding, and wind, you need to know if additional coverage or policies are required to pay for damage from such natural disasters.
While some damage may be covered by your auto or homeowner’s insurance policy, there are many variations and exclusions. For example, if your homeowner’s policy does not provide coverage for flood damage - and most policies don’t - you may need a separate flood insurance policy that covers flood damage, especially if you live in a flood zone or an area that is prone to flooding. If you don’t have coverage and disaster strikes, you’ll have to pay for repairs yourself.
Insurance You Might Not Need
Life insurance - Believe it or not, you may be able to drop your life insurance coverage. If your retirement income is sufficient, and you no longer have dependents who rely on you financially, you may no longer need life insurance, which is mainly intended to protect your family from the sudden loss of your income during your working years.
If, on the other hand, you have significant debt, are still financially providing for your spouse and children, or expect your estate will be subject to significant estate taxes, talk to your financial advisor about whether it would benefit you to continue carrying life insurance.
Disability insurance - Mainly for the same reasons life insurance may no longer be necessary for you, disability insurance could be one premium you can consider dropping in retirement.
Auto and homeowner’s insurance - These are pretty cut and dry. If you no longer drive and own a car, or own a home, you no longer need to have auto and homeowner’s insurance. If you do continue to own a car and home, you need to continue carrying insurance on them.
Once you retire, you should review your policies to be sure your coverages are sufficient and to find out if you’re eligible for any new discounts.
As you enter retirement, and your lifestyle begins to change pretty significantly, your insurance needs may change along with it. If nothing else, this is a good time to review your policies and coverage, talk to your insurance agents and financial advisor, and determine whether your needs are appropriately covered.
At PAX Financial Group, we have more than 100 years of combined experience in helping families retire in Texas and nationwide. We take the time to discover what is most important to you and your loved ones and then custom craft a plan for your success.
Have you started thinking about retirement, but don't know where to begin? Do you have a retirement plan in place but aren't sure if it will meet your needs? We can help. Contact the team at PAX Financial Group and schedule a no-obligation conversation today!