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Can Medicare Really Help Seniors Avoid Medical Debt

man tripping on insurance documentsOne of the fears of retiring individuals is how they will ensure that their funds will outlast them. Given their age and physical condition, they are unable to earn money to help them finance their needs. This puts them at a risky situation.

Of all the expenses that retirees are faced with, the most important tip to keep their retirement fund from retiring is to make sure that their health care costs are covered. Otherwise, they can put themselves in danger of medical debt.

The thing about getting old is the deterioration of your physical body. Even those who have the most robust body when they were young will eventually have their strength fade away. This is a fact regardless of your lifestyle. Among the things that you need to prepare for in retirement, is your ability to pay for these costs. They will come. That is certain for everyone.

Health care costs endanger retirees to be in debt

But while there is a need to prepare for health care costs, we are sometimes taken off guard by how expensive it is to get medical treatment. This is how a lot of us end up in medical debt. conducted a survey back un June 2013 and it showed the following statistics:

  • An estimate of 56 million Americans (64 years old and below) is expected to struggle in paying off their medical bills. 35M will be contacted by collection agencies, 17M will have a lower credit rating and 15M will use up their savings to try and stay out of medical debt.

  • 10 million citizens below 65 years old will not be able to afford paying for basic necessities because of health care expenses.

  • 1.7 million will declare bankruptcy because of unpaid medical expenses.

If this true for the younger ones, how more perilous will it be for retirees. Those within the ages 19 to 64 years (the main respondents of the NerdWallet study), are all still within the working age. The chances of them being able to earn income to pay off what they owe puts them in a better position than their elders.

The same study also noted that the main reason why medical debt is more likely to happen is because of the rising cost of health care. While some people should be responsible enough to save up for this, the high cost can sometimes make it inadequate. This is what is really causing the indebtedness of a lot of people. In some cases, consumers are opting out of getting medical treatment or following on their medical doses because it is just too expensive for them.

In fact, the National Conference of State Legislatures (NCSL) reported that health spending in the country last 2013 was estimated at $2.9 trillion. While the growth compared to the $2.8 trillion in 2012 is relatively small, the amount in itself is staggering. The report published on showed that the average spending in 2011 was $8,680 per individual. The report believes that this will go higher once the actual 2013 figures come in.

So what are the chances of our elders to avoid medical debt when health care costs continue to rise? How can they hope to give themselves the right treatment as their bodies age?

Facts about Medicare that can help avoid health care debt

This is where Medicare actually steps in to provide help with medical bills. One of the things that you need to accomplish before you retire is to understand how this government program can benefit you once you reach retirement. In most cases, people are scared that the coverage of this program will not live up to the health care benefits that you got through your employer.

Well there is only one way to find out and that is what this article will try to help you with.

So how does Medicare help seniors and will it keep them from medical debt? Here are important facts that you need to know about it.

  • While it is run by the federal government, the doctors, hospitals and laboratories are mostly private. They only enter into Medicare contracts and that is how 75% of your bill with them gets paid by the government. If your family doctor has a contract with Medicare, then you are free to continue consulting with them while letting the government pick up most of your tab.

  • Medicare, is not really free. It is, in essence, still a health insurance that you have to pay for on a monthly basis – just like the health insurance provided by employers. Unless you are eligible to get low-income assistance from the state, then this is something that will still go out of your pocket. Visit to know more about the costs that you need to pay off.

  • The great thing about Medicare is you get a lot of options. You have the traditional plans that allow you to go to any doctor in the country or state. There is also the various Medicare Advantage health plans that are oftentimes similar to private health insurances. Sometimes, you can choose from 50 health plan options. This makes it ideal to have a plan that will suit your personal health needs. For instance, Part A means you are covered for hospital stays, home services and hospice care. Part B covers the professional fee of the physician, outpatient expenses and any medical equipment that you will have to pay off. You can combine these and end up with the Traditional Medicare or just get one for your use. Part C, or more commonly known as the Medicare Advantage combines Part A, B and in most cases, D. Part D covers payments for prescription drugs. There is also the Medigap that covers the out-of-pocket expenses of Traditional Medicare.

  • Medicare will not charge higher premiums for existing ailments – which means you can choose to get covered for almost any health related concern.

  • There is a requirement to work long enough to be able to qualify for this health insurance. Also, you cannot avail of this when you decide to retire early. It has to be when you reach the age of 65. That means you may have to deal with a couple of years without health coverage – unless you go for a private insurance plan.

In essence, Medicare is a monthly premium that you have to pay off so you can prepare for the health expenses that you will have in the future. It is a good idea to get this so you can avoid medical debt. Any out of pocket expenses will not be as damaging as it should be if you opted out of this government program.

How to finance your medical expenses and avoid credit

Getting ready for retirement requires you to go through a lot of tasks and it all begins with knowing. If you know that your family has a history of hereditary ailments, you may want to make sure that you are prepared for this. Apart from learning about Medicare, here are a couple of tips that can help you deal with the unexpected medical costs that can put you in debt.

  • Know your other options. Apart from Medicare, if you know that you will need more coverage, research on the right health insurance that can give you what you need. In most cases though, Medicare can supply what you generally need.

  • Get your dietary intake straightened out. Prevention is better than cure and most health related problems can be dealt with by eating right. If your family has a history of diabetes, then ease off the sweets. If you have a history of heart ailments, then stay away from food that will endanger your heart.

  • Live a healthy lifestyle. Lastly, make it a point to take care of your body. Exercise, sleep well and prepare yourself for old age. You only feel weak when you stop doing something.

3 Steps To Conduct A Retirement Plan Check Up

percentageOne of the best strategies to have a good retirement is to constantly review your plans. Do not think that after creating your retirement plan you can leave it like that and it will guarantee enough funds for you. These plans span over a very long time (especially when you start early) and a lot of things can change.

Most of the retirement contributions are done through investments and the market can change a lot over the years. You want to make sure that your contributions are poised to earn as much interest or profit by putting it where it can grow the most. It is a constant periodic review that you must make and it will help you understand the whole game all the more.

Why do you need to review your retirement planning strategies

There are many reasons why you need to review your retirement planning strategies over time. Apart from keeping tabs in the market, you need to update your knowledge when it comes to maximizing the growth of your funds. There are just too many factors to consider that are constantly changing. You have the inflation rate and the consumer prices that continually rise. You also have to understand that your priorities change over time and that can affect your future needs. Illnesses can happen that may have to be funded when you retire. You need to consider all of these things to make sure that you will not fall short on your retirement fund.

One of the reasons why you need to conduct a periodic retirement is to understand how the whole retirement planning can benefit you. A 2013 study conducted by Charles Schwab revealed that a lot of consumers are confused about their retirement plan. According to this study, a lot of consumers know the importance of planning for retirement but not everyone are confident that they can manage it correctly. Among the other findings include:

  • 6 out of 10 respondents use the 401(k) as their largest retirement saving plan.

  • 9 out of 10 say that they rely on themselves to save up for retirement.

  • More than 50% increase their contributions in the past 2 years.

  • 74% believe that their 401(k) have recovered faster than expected.

  • 52% view their 401(k) as more confusing compared to health care benefits.

  • 46% do not know what investment option is best for their specific needs.

  • 34% feel stressed when they have to make decisions about their 401(k).

  • 61% of respondents believe that they will feel more confident if they get the help of a professional.


Obviously, the confidence of consumers when it comes to their retirement plan stems from the fact that they are confused. When you have no idea what you are doing, you will really feel at a loss and that will keep you from making good decisions about your retirement plan.

How to review your plans for retirement in 3 steps

So how do you review your plans for retirement? A good question to answer first is when should you check your plan? Well it actually depends on how much free time you have in your hands. The more often you can check it, the better it will be for you. But if you do not have the time, a yearly check up of your retirement plan should work just as well. This is a very important task to do during your pre retirement years.

The more frequent you check your plan, the more you will understand it. So how should you conduct your yearly check up?

Step 1: See how your retirement plan performed since your last check up.

Get all your statements and the investments from your portfolio and see how they have performed since your last check up. If you conduct your retirement check up at the end of the year, it will just be in time for the year-end statements that you get from the mail. When you total all your investments, the first thing that you need to check is this: how much is your total retirement fund. Compare that amount with your end target. How far have you come? How much percentage have you saved up? Is it enough for you?

Then, you need to check the growth of that fund. Was it as big as you expected? If not, you need to compare the growth of your investments with that of similar investments in the market. If bonds are part of your retirement plan, you need to compare it with the performance of other bonds. If it performed as much as the others in the market, then you are on the right track. You need to analyze if your money will grow further in this particular investment. Try not to be too obsessed over a few points below the average. But if it did not grow in the same way as your point of comparison, then you know that you should put your money elsewhere.

Step 2: Check the fees involved in your retirement fund.

In most cases, investments require a certain amount of fees. These can be with the money manager who takes care of your mutual funds. Or it could be the commissions charged by your broker. You want to weigh the profit that you earn against the money that you spend to achieve that growth. This is even true with your 401(k) contributions. You can check out the fees through your Human Resources. Make sure that you get as low as you can when it comes to the charges. If not, try shopping around if you can get a lower one. If there are things that you know you are already capable of doing, then you may want to forego the professional help that leaks out money from your funds.

Step 3: Make new retirement plans.

When you have finished the two steps, you need to decide on whether you will continue with the plan  without any changes or you will make some changes. Will you invest more in the baskets that currently hold your funds or will you transfer them?

Another thing that you need to look into is diversification. For sure, some of your investments have grown more than the others. For instance, if your stocks did very well in the past year, then it may be carrying a bigger percentage of your retirement fund. You may want to balance your portfolio by shifting funds or reinvesting in other investment options. It may be time to venture into new markets. The bottom line is, make sure your risk is balance well in your various investments.

According to an article in Wall Street Journal, a research suggest that buying more stocks than bonds may be the best way to prepare for your retirement. In the past, experts say that as you age, you may want to invest more money in bonds because they provide more security for your money. The study revealed that people who grew their stock investments over time are more likely to get ahead when it comes to the growth of their money.

Of course, all of these suggestions should be filtered depending on your investing personality. If you are the aggressive type and your funds can deal with high risk investments, you may want to follow the advice mentioned in the Wall Street Journal article. Think about all of these and give your retirement plan a makeover.

Here is a video from National Debt Relief that should help you rearrange your budget to coincide with the changes that you will make on your retirement plan.

Going Through Retirement Stress? Here’s How To Fix That

grandma looking shockedDo you find yourself lying awake at night thinking about when you will retire? How do you feel when you think about these things? Do you feel confident? Or do you feel a sense of foreboding and apprehension?

If your feelings are running along the lines of the latter, then you are experiencing retirement stress. You are not alone in all of this. A lot of people, especially those who are near the retirement age are losing sleep over their retirement. And there is good enough reason why.

Based on the retirement statistics found on, the scenario is not too promising. The average savings of 50 year olds are only at $43,797. If the average retirement age is 62 and the length of retirement reaches up to 18 years, then this will not suffice. The site also mentions that a couple over 65 will need $215,000 to cover medical expenses over a span of 20 years.

The statistics show that 80% of those between the ages 30-54 do not think that they will have enough fund when they retire. No wonder people are experiencing retirement stress. With 35% of 65 year olds and above relying on Social Security, you will wonder if this will be the same fate that you will have.

3 reasons why you are stressed over retiring

Generally, there are three major reasons why you are feeling a bout of retirement stress.

You do not have enough. The first and major reason to feel anxious about retiring is when you know that you do not have enough funds to finance your needs. When you retire, you stop working and that means you do not have a stable source of income for your monthly requirements. If you only rely on your Social Security, it will not be enough to finance your basic needs – let alone the medical expenses that you will surely face. We all know how the cost of living rises and health care costs are rising even faster. You need to have the money to finance these needs. Otherwise, your retirement may not be as comfortable as you hoped it would be. Worse, you may have to forego certain medical treatments because you cannot afford it. These are the scenarios that will surely keep you up late at night.

You still have debts. Another reason why you are experiencing retirement stress is because you still owe a lot of debts. When you barely have enough to pay for your basic needs and your medical expenses, you can be sure that debt payments will have no room in it. This is a scary scenario because the creditors can come after you to get the assets that you have. Do you really want to start your retirement by declaring yourself bankrupt?

You are running out of time. Lastly, another reason to fear for your retired life is when you know that you do not have enough time to be financially ready for it. Most people are wondering, will they be able to retire at 67? Or earlier? Most people are feeling retirement stress is because they know that the clock is ticking and they are pressured to get rid of debts and save up for their retirement. If you have limited resources to begin with and you need to take care of both, will you have enough time to be ready for retirement? It seems like a long stretch and a lot of people are forced to forego their dreams of retiring early. If this is you, then you know that you need to pull your act together and start working hard.

Tips to help you prepare for retired life

Given your current situation, you want to make sure that you let go of retirement stress so you can focus on the task at hand. When you have worries over your head, that will keep you from concentrating on the problem at hand. Try to keep your high strung emotions from hindering your full potential to grow your money in time for retirement.

Here are some of our suggestions.

  • Make a plan. If you have a retirement plan, no amount of stress will keep you from the things that you have to do. This is important as it will serve as your roadmap towards a great future.

  • Take advantage of your employer’s contributions to your 401(k). Some employers match whatever you put into your contributions and you may want to take advantage of that. This is free money after all!

  • Do not withdraw your 401(k) early. Some people are tempted to pay off their debt with 401(k) funds. Having less money in your retirement fund will not help your stress level go down so avoid this at all cost.

  • Invest your money. If you are worried about not having enough money in time for retirement, then you may want to invest some of your money in stocks, bonds or mutual funds. That way, you can grow your money in different baskets. It will be faster and if one fails, you can be assured that the others can keep you from losing everything.

  • Lower your expenses. If you want to increase your money to afford debt payments, you may want to keep your expenses down. You can downsize if the kids are all out of the house. Think about getting rid of the stuff that are just cluttering your home. Sell them off and make money out of them. That will help grow your retirement fund or help you pay off your debts faster.

To keep your retirement stress from distracting you from the things that you have to do, stop obsessing about time. There is no sense in thinking about the mistakes that you made in the past. Just move forward, trust in the plan that you made and strictly follow it.

A Surprising Report About The Middle Class’ Retirement

piggy bank houseBaby boomers are at an age where they are poised for retirement but unfortunately, not everyone will get their dream. Apparently, a lot of them will not only forego an early retirement and wait until they reach 80 to retire, but they may have to keep on working until they “drop”.

One of the biggest contributor to this is the fact that what they make is not enough to pay off debt acquired over the years. There are a few more considerations such as lack of proper retirement planning leading to less than desired funding and the fear of diminished social security checks and medical expenses.

The middle class expectations when they retire – according to Wells Fargo

In a recent press release from, they discussed a survey that gave us statistics about the dilemma of would-be retirees – especially those within the middle class range. Here are the highlights of the Middle Class Retirement study that had around 1,000 respondents between the ages of 26 to 75 years.

  • 59% of the middle class population prioritize paying their monthly bills.

  • 13% of this same group prioritize retirement savings.

  • 42% of middle class Americans say that saving and paying the bills at the same time is not possible.

  • 48% of the respondents are not confident that they will have enough for retirement.

  • 34% of the group will retire at least when they are 80 year old.

  • 39% of those between 40 to 59 years old have a plan for retirement.

According to press release, the study had been done for the past 3 years and Wells Fargo noticed how paying the bills is a growing concern for a lot of them. Not only that, the study shows how these people are not optimistic in having enough funds in the bank for retirement when the time comes for them to actually retire. This is the reason one of the main objectives of the survey is to help people craft a retirement plan to help them in the future.

The survey also shows how a well thought of plan and having the discipline to stick to it can actually make your future a little more brighter.  The study discusses how people with a retirement plan are more likely to feel they are on the right track to succeed in their goal as against people who are just winging it and hoping for the best. 52% of the middle class population are confident about retirement even though only 29% have an actual plan for it. Those who have a plan usually have the willpower to do it – around 91% of them at least.

Tips to guarantee your dream retired life

With all these, it cannot underscore more the fact the need to seriously look into your debt situation. If it is one of the primary reason that is preventing you from enjoying the fruits of labor at the time that you should, there must be something seriously wrong that needs to be addressed. Debt cripples a lot of opportunities in life and the survey points out that even would-be-retirees cannot avail of their retirement because of debt.

Surprisingly enough, the 30 year olds, from the same survey, are the ones with the foresight on the need for proper planning and the open-mindedness to look for alternative income generating investments for their retirement age. They are the ones with 401(k) savings and who believe that investment in stocks is a great financial opportunity that could yield much needed income in their twilight years.

If you are worried about your retirement plan while drowning in debt, here are some tips for you.

  • Set a target retirement amount. Having a goal will make things easier to plan. Compute how much you will need when you retire by determining how much your chosen lifestyle will cost. Think about where you will retire, if you will downsize and other expected expenses. For instance, have a general checkup so you can prepare for your health expenses.

  • Determine how much you should put aside to reach your goal. Using your age as reference, see how much you should be putting aside so you can have your target amount by the time you retire. This computation will tell you if you need to postpone your retirement or you can afford to retire early. You should set a monthly amount that you will stick to.

  • Create a budget. After computing your target amount, you should create a budget to incorporate this in your monthly contributions. Make sure that you put it high in your priority.

  • Choose a debt relief option. When you have all of this, you need to prepare a plan to pay down what you owe. There are debt relief programs that you can choose from. There are programs like debt consolidation that can allow you to contribute to your retirement plan without a problem.

  • Pay down your debts. Like your retirement, your debt payments will have to be taken cared of. As you are building up your retirement fund, you will have to lower your debts at the same time. This is how you prepare for your life when you retire.

The middle class are the people who have a steady income to pay for the things that they need. It is not that they cannot afford to save up for retirement. The main problem lies in the fact that they are spending their money on things that are not important. That leaves them falling short on the things that are more important – like their retirement or debt payments. If they organize things, they should be able to save enough in time for retirement. Planning certainly make a whole lot of difference.

What To Do During Your Pre-Retirement Years

As we all age, out priorities change. In our 20’s, we are all focused on our careers and establishing our financial independence. When we reach our 30’s, we begin to see improvements in our work life and that allows us to shift our eyes towards our personal relationships and we begin to consider settling down. In our 40’s we may or may not have children but nevertheless, our priorities still change as we struggle with mortgages and other credits that we have accumulated in the past.

What To Do During Your Pre-Retirement YearsBut when we reach our pre-retirement age of 50, things start to slow down a bit and we are now faced with the prospect of our retirement. Most financial experts encourage young individuals to start thinking about their retirement while they are still young. In most cases, 20’s is the perfect time to start building a fund for retirement. Given the latest economic crash, it seems that preparing for retirement when you are in your 50’s may be too late – especially when you have a lot of debts to consider.

While you will not be able to build up the same amount of funds if you started out young, it is not too late for you to have a comfortable retirement. But the thing is, you have to act now. To not delay anymore and consider your options to have the most comfortable and convenient twilight years.

Don’t carry your debts in retirement

Before you can think about how much you need to raise before you retire, you have to look at your financial condition first. Do you have debts? If so, what is the total amount and how long do you expect to pay it off?

The only way to maximize your limited time and resources during your pre-retirement years is to get rid of the debts. To help with that, you may want to enroll in a debt relief program that will allow you to make the best progress in paying down what you owe. You have debt consolidation options that will help you complete payments in 5 years – at least for your unsecured loans. These programs will provide you with a restructured plan that will give you a lower monthly requirement and possibly a lower interest rate.

You also have the option to go for debt settlement that involves negotiating with your creditors. You will convince them that you are in a financial crisis. The goal is to propose a settlement amount that is lower than what you currently owe. If you pay this to them, that will pay only a percentage of your debt and the rest will be forgiven.

Get rid of most debts that you owe – especially the high interest ones. Pay down your credit card debts so you can maximize your money and save up for retirement. If you are still paying for student loans, you may want to see if you qualify for the loan forgiveness program of the federal government. For mortgages, see if a reverse mortgage is applicable to you.

What to consider before you retire

When you have dealt with your debts, there are other considerations that you need to take care of. All of this will be to determine how much you will need to save to give you the type of retirement lifestyle that you want.

Here are some tips to help you determine how much you need to raise.

  • List the retirement benefits that you can expect to receive. This includes your Social Security, 401(k) and other pensions. This will help you identify if there are any deficit to your expected expenses.

  • Get a full medical check up to spot any ailments that you may face in the future. See to a health care insurance package that you can use or any preventive measures that you can undergo to keep serious health issues at bay. Check the Medicare or Medicaid benefits that you are entitled to. Also, get a fitness program that will help you feel energized despite your aging physical body.

  • Think about where you want to live. If you still owe a lot in your current home, you may want to sell it and opt for a smaller home – since all the children should have moved out by now. Some people get an RV and tour the country. Some opt to live overseas – in a country where the cost of living is not too high.

  • Plan what you will do in your spare time. Retired individuals will have so much time in their hands – you need to think about what you will do when you stop working. What fun activities will you involve yourself into? Will you work on your hobby and earn from it? Any earning that you can project will probably be a good idea – but should not be as stressful as your corporate life.

Once you know how much you need to raise, it will be easier to map out your retirement plan. If you have the time and you have the savings to afford an investment, you may want to put a part of your money to help it grow faster.

There are online calculators that you can use to help you compute your retirement fund. The AARP site has a great retirement calculator. Bankrate has an asset allocation calculator and the Social Security Administration offers a benefit estimate calculator to help you anticipate the what you will get. Use these to get a better bearing of what your finances will be like when you retire. It is best to settle the important issues before you leave your pre-retirement years.

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