Once you reach retirement, keep an eye on where you fall in your tax bracket. If you are nearing the top of the tranche, consider withdrawing funds from your Roth accounts for the remainder of the year to avoid moving to the next tranche and owing a larger percentage of your savings to the government.
2. Health care
It’s no secret that healthcare is expensive and people generally spend more on healthcare as they get older. But many people do not know where these costs come from. Medicare helps you cover some of these, but it also comes with costs. You have premiums, deductibles, and co-payments, just as you would with regular insurance. Be sure to plan for these expenses when saving for retirement.
Then there are the things that Medicare doesn’t cover, like dental care, vision care, and hearing aids. There are several ways to handle this. You can buy a Medicare supplement plan to cover some of these things, but it will incur an additional premium, deductible, and co-payment. You can also choose a Medicare Advantage plan, which effectively replaces your original Medicare with a plan that covers all of the same things, plus a few extras. Or you might consider adding a dental or ophthalmic discount program.
For long-term care, consider a long-term care insurance plan, although you should be aware that these can be expensive. You can also just put money aside for long-term care in your retirement account or health savings account (HSA) if you can afford it.