- There are many different parts of financial planning that should affect an individual’s health, says certified financial planner Carolyn McClanahan.
- People with poor health or medical problems need to have a completely different plan than healthy people, she says.
- For example, life expectancy, or the amount of money you need to save for retirement, should reflect your health status.
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When you think of health as part of your financial planning, you might think in terms of related out-of-pocket costs such as insurance premiums and co-payments.
While these expenses are significant, health should impact multiple items in your budget, according to Carolyn McClanahan, certified financial planner and physician, founder of Life Planning Partners in Jacksonville, Florida.
“It’s more than that,” said McClanahan, who is also a member of CNBC’s Financial Advisors Council. “A healthy person needs something completely different [financial] Plans from people with health problems. ”
For example, people with severe medical problems, meaning people with a short life expectancy, likely don’t need to plan to extend their retirement savings until age 100, McClanahan said.
“It’s asking them to save too much and they’re missing out on life right now,” she said.
Additionally, there are types of insurance that are difficult, if not impossible, to obtain when health deteriorates, McClanahan said.
“People who have health problems, or who are at risk for them, need to think more deeply about their insurance.
For example, if you are young but have significant risk factors for diabetes, for example, life insurance is generally cheaper than if you applied for it after you developed the disease.
The same is true for short-term and long-term disability insurance. This is to make up for lost income if you are unable to work due to health reasons. Even if you are eligible for this insurance after a medical problem has occurred, your insurance company may impose exclusions for pre-existing conditions.
Additionally, many people considering long-term care insurance don’t do so near or until retirement, McClanahan said. which many older people will need later in life.
However, by that time, you may have developed a health condition that makes the cost of such insurance coverage prohibitive or impossible. McClanahan says it’s best to think even more upfront about potential costs.
And while everyone can benefit from having a real estate plan to make your wishes come true, those with health issues should prioritize end-of-life planning, McClanahan says. Told.
In addition to making a will that shows who gets your belongings and various other assets and confirming that the beneficiaries of your account are the intended recipients, your estate planning should include a living will. there is. This document outlines the medical care you want and the medical care you don’t want if you can no longer communicate those needs yourself.
You should also have a power of attorney assigned to a trusted individual for health care and, aside from that, your finances. If you become powerless, those people will make decisions for you.
“Everyone needs these documents, especially if they have a serious health problem,” McClanahan said.
For budgeting costs that are directly related to various aspects of physical and mental health, it is helpful to consider what type of health care user you are.
“There are people who rarely go to the doctor for anything, but there are people who go to the doctor for everything, [use] It drives up health care costs more than anything else,” McClanahan said.
“If you know how you’re using healthcare, you can factor that into your cash flow projections,” she said.
