48 KIPLINGER’S PERSONAL FINANCE^ 02/2020but you’ll have to pick up the entire
premium, not just the percentage you
paid as an employee. On the plus side,
you’ll be able to stay in the same pro-
vider network you had while you were
working. Your human resources de-
partment can tell you how much you’ll
pay under COBRA; don’t forget to fac-
tor in deductibles and other out-of-
pocket costs.
Another option is to buy a policy
through your state’s health insurance
exchange (search for your own state’s
options at http://www.healthcare.gov).
These policies can be pricey, but the
insurer can’t turn you down because
of preexisting conditions, and many
retirees qualify for income-based tax
credits.- Don’t forget about taxes
The tax code offers some perks for
seniors. If you’re 65 or older, for
information about the costs of various
medigap policies.
Dental care isn’t covered by tradi-
tional Medicare (although some Medi-
care Advantage plans cover it) and can
be a huge expense in retirement, says
Diane Pearson, a CFP in Pittsburgh.
She has had clients who paid $30,000
to have their teeth removed and re-
placed with implants. She’s also seen
clients spend more than $3,000 on
hearing aids, which aren’t covered by
Medicare, either. Fidelity Investments
estimates that 15% of your retirement
income will go toward health care,
and if you have a chronic illness or dis-
ability, the percentage could be much
higher.
If you retire before age 65, the costs
for health insurance premiums, along
with deductibles, can be steep. You
can stay on your employer’s health
insurance plan for up to 18 months un-
der the federal law known as COBRA,once you stop working. The first
few years of retirement—65 through
70, for example—are often referred
to as the “go-go years,” a term popu-
larized by Michael Stein, a CFP and
author of The Prosperous Retirement.
It’s the period when many retirees
are still in good health and eager to
do all of the things they didn’t have
time to do when they were working.
Retirees “always spend more on travel
and entertainment than they thought
they would,” says Jorie Johnson, a
CFP in Brielle, N.J. Instead of one
big annual vacation, they’ll go on two
or three trips a year, she says. Even
if your dream retirement involves
staying close to home and working
in the garden, your heating (or air
conditioning) bill will probably go
up because you’ll be home all day.
You may also decide that it’s high
time to renovate your kitchen—which
you’ll be using more because you’ll
have more time to cook. (For strate-
gies to test-drive your retirement,
see page 52.)- Get a handle on
health care expenses
The average Medicare beneficiary
spent more than $5,400 in out-of-
pocket costs for health care in 2016,
according to the Kaiser Family Foun-
dation. The total includes spending
on premiums for Medicare Part B,
prescription drugs, supplemental
insurance and other costs.
To estimate your individual costs,
you’ll need to decide whether you
want to sign up for Medicare Part B
plus Part D and a medigap plan—a
supplemental policy that covers costs
traditional Medicare doesn’t cover—
or Medicare Advantage. Medicare
Advantage plans provide medical and
drug coverage from a private insurer
that has its own network of doctors.
To figure out how much you’ll need
to budget for the plan you choose,
go to Medicare’s Plan Finder at www
.medicare.gov/plan-compare. You can
also click on a link that will provide
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