Sometimes life happens differently than we planned. Although there have been great improvements in how we manage chronic diseases such as high blood pressure, cancer and diabetes, these illnesses can take a toll on your health. Taking care of your health is paramount, but illness can also affect your financial health.
Regardless of your current health status, one of the most important aspects of financial planning is protecting your health against the possibility of chronic illness. In this article, we’ll discuss what you should do in your 20s, 30s, 40s, 50s, and 60s to protect your financial health from the threat of chronic illness.
A diagnosis of diabetes or other chronic disease can be life-changing, not only in terms of health but also in terms of finances. Managing the financial impact of chronic disease is a key component of maintaining a good quality of life. This article discusses strategies to protect individuals and their families from the financial burden associated with diabetes and other chronic diseases.
Chronic illnesses are expensive
As if the health impacts of chronic disease weren’t enough, there are also significant emotional and financial consequences. In fact, the total cost of chronic disease in the United States averages $37 trillion per year, roughly 20% of the U.S. gross domestic product. These costs include not only the direct costs of prescriptions, procedures, and other medical services, but also indirect costs such as lost work.
The most common chronic diseases include diabetes, Alzheimer’s disease, osteoarthritis, hypertension and cancer and can lead to hospitalization, long-term disability, reduced quality of life and significantly increased household costs.
Diabetes is particularly costly
According to Milken InstituteAfter Alzheimer’s disease, diabetes is the most expensive chronic disease. On average, medical costs for people diagnosed with diabetes are about 2.3 times higher than those without diabetes. In 2017, these costs accounted for 1 in 4 dollars of health care costs in the United States.
20s: Build a strong financial foundation
Your 20s are often a time of new independence and exploration in life, and while health concerns may not be at the forefront of your mind, this decade is a crucial one for establishing a strong foundation for your financial and physical health.
Here are four things to consider:
Health Insurance: Enroll in health insurance through your employer, a private plan, or your parents (if that’s still a choice). Learn about the terms of your insurance, including deductibles and co-pays.
Emergency Fund: Start saving up an emergency fund to cover unexpected medical expenses. Having financial security gives you peace of mind.
Healthy lifestyle: Develop healthy habits now. Regular exercise and a balanced diet will reduce your risk of chronic diseases in the future.
Learn about chronic illnesses: Understand common chronic diseases and their risk factors, and assess your family history for health factors. Knowledge is a powerful tool for prevention.
Strong financial foundation: Learn about personal finance and develop strong financial habits so you’re prepared for whatever life throws at you.
- Use the NewRetirement Planner to create a plan, monitor your progress, and maintain financial wellness throughout your life.
30s and 40s: Strengthen your financial security
As you reach your 30s and 40s, you’re juggling work, family, and financial responsibilities. This is a critical decade to take steps to strengthen your financial security and reduce the risks associated with chronic disease. By focusing on prevention and building financial resilience, you can build a stronger safety net for the future.
Life and Disability Insurance: Consider purchasing life and disability insurance to protect your family’s financial future in the event of illness or premature death.
Regular check-ups: Schedule regular health checkups and exams. Early detection can prevent small problems from becoming major health and financial burdens.
Maximize your retirement contributions: Contribute to retirement accounts such as 401(k)s and IRAs. Long-term financial security goes hand in hand with retirement savings.
Regular exercise: Maintain an active lifestyle to reduce your risk of heart disease, diabetes, and other chronic diseases.
Healthy eating: Prioritize a healthy diet rich in fruits, vegetables and lean protein. Minimize your intake of processed foods and excess sugar.
Regular screenings: Follow your health care provider’s recommendations for regular checkups such as mammograms, colonoscopies, and cholesterol tests.
Financial PlanningReview and update your financial plan. Adjust your priorities and make informed decisions about your money.
- The NewRetirement Planner helps you make better decisions. Run through all the “what if” scenarios. Find out if you can help pay for your kids’ college or take time off, know when you can safely retire, and keep an eye on your financial situation.
Early 50s: Retirement Visible on the horizon
Retirement and aging become more prominent in your 50s. It’s time to focus on your financial wellbeing and health. As you approach retirement, you need to be mindful of your retirement savings and health insurance, while managing risk factors for chronic diseases through proactive health practices.
Retirement Savings: Increase your retirement savings. Maximize your contributions and catch up if necessary.
Health Savings Account (HSA): If you have high-deductible health insurance, consider contributing to an HSA, which offers tax benefits and can be used for qualified medical expenses in retirement.
Chronic Disease ManagementIf you’re diagnosed with a chronic condition, work closely with your healthcare provider to manage it effectively. Early intervention can reduce long-term healthcare costs.
Are you stressed out at work? Consider taking a sabbatical: You may not be ready to retire at this point, but you may need a break. Have you considered taking an extended sabbatical? Taking an extended break from work may help rejuvenate your mind and health.
50s and 60s: The transition to retirement
As you approach the end of your working life, you’ll need to pay close attention to both your physical and financial health. It’s important to understand where you stand in terms of health, wealth, and the intersection of the two.
It’s time to develop a detailed financial plan for your future, including income planning, Medicare coverage, optimizing Social Security benefits and considering your lifestyle.
Putting together a comprehensive retirement plan: It’s time to take a closer look at your retirement plans. With NewRetirement Planner, you can get clarity on:
- What, when and how much will you spend after you retire?
- Sources of income and ways to withdraw savings to ensure they can cover both necessary and nice-to-have expenses
- A clear plan for medical care and medical expenses
- A backup plan for the worst case scenario
Medicare: Enroll in Medicare as soon as you become eligible, usually age 65. Be sure to understand the different parts and coverage options.
social security: Decide when to claim your Social Security benefits. Delays can result in higher monthly payments.
Estate Planning: Create or update your estate plan, including living wills, powers of attorney, health care proxies, etc. Ensure your financial situation is in order.
Check your insurance policyReview your life, health and long-term care insurance coverage to see if it meets your current needs.
Conclusion
Protecting your financial well-being from the possibility of chronic illness is a lifelong journey that requires planning, awareness, and commitment. Regardless of your age, taking proactive steps like investing in insurance, prioritizing a healthy lifestyle, and staying informed about your healthcare options can help mitigate the financial challenges that chronic illness can present.
Remember, your financial health is closely intertwined with your physical health, so aim for a balanced approach that supports both.
