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How to Properly Budget for Medical Costs, Avoiding Retirement Shock – and More
This week’s news hit all the pressure points for retirees: rising health costs, the long-term care wildcard, the evolving meaning of “a good retirement,” and even how employer decisions about executive benefits can ripple into retirement security. Here’s the fast, useful read—with concrete actions to take now.
By RetirementRedFlags.com
August 22nd, 2025
Take charge today to shield your data, plan for care, and shape a retirement that’s both financially secure and personally fulfilling.
1. A smarter way to budget medical costs in retirement
A new Yahoo Finance piece suggests organizing health expenses into clear “buckets” so you don’t underestimate what Medicare won’t cover. Think: one bucket for predictable premiums (Medicare Parts B & D and Medigap), a second for routine out-of-pocket bills (copays, deductibles, dental/vision), and a third “what-if” reserve for big health surprises. The goal is to stop guessing and start pre-funding.
Action Steps:
✔ List your 2025 premiums and set them on auto-pay from a dedicated “health bucket” account.
✔ Park 12 months of expected copays/deductibles in cash or short-term T-bills.
✔ If you’re not on Medicare yet, max an HSA; once enrolled in Medicare you can’t contribute, so front-load now.
2. The last Baby Boomers are redefining “a life well lived”
As the youngest Baby Boomers edge into retirement, more are designing for purpose, community, and identity—not just income. The reporting highlights how encore work, volunteering, and structured routines help avoid the “retirement shock.” Money matters, but meaning keeps you engaged.
Action Steps:
✔ Block 3 recurring weekly slots for social connection (clubs, classes, faith, volunteering).
✔ Trial a 1–2 day/week paid or volunteer role for 90 days; keep it if it boosts energy.
✔ Write a one-page “Retirement Vision” (what a great Tuesday looks like, who you’re with, what you’re building).
3. Could a federal backstop for long-term care change the math?
Morningstar researchers model how a national LTSS (long-term services & supports) backstop—like the WISH Act concept—could raise retirement-income adequacy by 30%+ for eligible households, by capping catastrophic care costs that devastate plans today. Even without new policy, their LTSS work shows why planning for care belongs in every retirement plan.
Action Steps:
✔ Price home-based care in your ZIP code; set a target reserve (e.g., 1–2 years of moderate in-home care).
✔ Ask an independent agent to compare traditional LTC insurance vs. hybrid life/LTC; lock prices while healthy.
✔ Add care directives (POA, HIPAA, living will) to your estate binder and tell your family where it is.
4. Executive talent gap = employer risk… and a retiree planning ripple
Yahoo Finance flags that employers are juggling a widening executive talent gap, rethinking retention tools like deferred comp and executive benefits amid economic uncertainty. For late-career professionals, this isn’t just HR news—your nonqualified plans, SERPs, and deferred bonuses are promises backed by your employer’s credit, and plan design can change. If you’re an owner or ex-executive, it’s time to review payout timing, vesting, and beneficiary designations.
Action Steps:
✔ Request a current statement of every deferred comp/SERP benefit and confirm distribution elections.
✔ Evaluate employer credit risk (diversify away from concentrated company risk where possible).
✔ If you’re a business owner, review the succession plan & key-person coverage so retirement income streams are protected.
5. New push: wipe your data to protect retirement accounts
Fox News’ CyberGuy warns that elder fraud losses topped $4.9B in 2024, with most scams leveraging personal data scraped from data brokers—which makes phishing and account takeovers eerily convincing. The fix: shrink your digital footprint via data-broker opt-outs and tighten account security.
Action Steps:
✔ Freeze your credit at all three bureaus and set bank/IRA alerts for sign-ins and withdrawals.
✔ Use a password manager and hardware security key (or app-based 2FA) on email and financial accounts.
✔ Start a monthly data-broker sweep (manual opt-outs or a reputable automated service). Teach a spouse or trusted contact how to do it, too.
If you have any questions about the headlines that hit the news this week, we are answering questions in our free Facebook group The Retirement Red Flags Community. Click below and we will make sure you get added.