The transition to life as a retiree is a time for making changes. One of the most important aspects of this shift is reassessing your insurance portfolio to align it with changing financial goals, healthcare needs, and income sources. Crosby Insurance Group knows how to help you succeed during this challenging change. Discover the first steps to security in your new life below.
Top Insurance Changes After Retirement
1. Reassess Health Insurance Options
Retirement typically means the loss of any employer-sponsored health plans. In the United States, most individuals become eligible for Medicare upon turning 65. Medicare, however, is not a one-size-fits-all solution. Medicare Part A covers hospital stays, Part B covers outpatient care and physician services, and Part D handles prescription drugs. Still, there are gaps in Medicare coverage that can expose retirees to high out-of-pocket costs.
To bridge these gaps, many retirees turn to Medigap (supplemental) policies. Medigap plans can help pay for deductibles, copayments, and coinsurance that Medicare does not fully cover. Another option is a Medicare Advantage plan, or Medicare Part C, which bundles Part A, Part B, and often Part D coverage under a private insurer.
Because healthcare needs may evolve over time, it’s crucial to review these policies annually, making changes during enrollment windows if the coverage no longer fits your circumstances.
2. Consider Long-Term Care Insurance
Long-term care (LTC) insurance is designed to cover services such as nursing home stays, assisted living, or in-home care, which traditional health insurance and Medicare typically do not pay for. (There may be coverage for a short period immediately following a hospital stay.) These expenses can quickly eat up retirement savings.
Premiums tend to be lower if you buy LTC insurance before retirement, but there may still be affordable options for retirees in good health. Some LTC policies also offer inflation protection riders to help ensure the policy payout keeps up with rising long-term care costs. LTC insurance policies can be expensive, so it’s important to shop around, compare offerings, and assess whether you need comprehensive long-term care coverage and can afford it.
3. Review Auto Insurance Needs
Retirement often brings changes in how much you drive. For instance, if you commute far less or no longer drive to work, you may be eligible for lower auto insurance premiums through low-mileage discounts or usage-based insurance programs. Letting your insurance agent or carrier know you are driving fewer miles might lower your auto insurance bill.
Many insurance companies offer discounts to drivers who complete approved defensive driving courses (including South Carolina), particularly those aged 55 and over. To maximize potential savings, it’s essential to contact your specific insurance provider to confirm their discount policies and ensure the chosen defensive driving course is approved. Consider courses offered by organizations such as AARP, but always verify course acceptance with your insurer beforehand.
And be aware that you may need additional coverage if you’re planning to travel outside of the U.S. during retirement. Renting a car in another country may require international liability insurance.
4. Review Home Insurance Needs
Downsizing from a large family home to a smaller house or condominium can reduce your homeowner’s insurance premiums. However, every move comes with unique considerations—like coverage for shared spaces in a condo association. It’s wise to review these policies after any significant change in your living situation to make sure your coverage is appropriate for your new circumstances.
5. Update Life Insurance Policies
Some retirees find they no longer need as much life insurance as they did before, particularly if children are grown and self-sufficient, and if major debts like mortgages are fully paid. But even in retirement, a life insurance policy can play a vital role in estate planning. For example, you might want to maintain coverage to offset estate taxes or cover final expenses.
If you own whole or universal life insurance that has accumulated cash value over time, you might want to tap into the cash value to supplement your retirement income. Of course, it’s important to make sure that the remaining death benefit will be sufficient and that the withdrawal doesn’t trigger unexpected taxes.
If full-fledged life insurance feels unnecessary, final expense or burial insurance might be an option. These smaller policies are designed specifically to cover funeral costs, minor debts, and other end-of-life expenditures, relieving surviving family members of financial burdens. The premiums are generally affordable compared to large death benefit policies.
Schedule Regular Reviews
Circumstances change throughout retirement. Health conditions can change, financial priorities may shift, and your family situation could evolve. That’s why it’s essential to schedule regular insurance reviews—ideally once a year—to make sure your policies continue to reflect your needs. Insurance carriers regularly adjust premiums, benefits, and offerings. Staying current with these changes ensures you won’t be paying for unnecessary coverage or left unprotected against loss.
Insurance shouldn’t be static. Look at it as a dynamic component of your financial plan, ready to be adapted and refined as your retirement years unfold.
Retirement Planning in South Carolina
Planning your retirement in Mt. Pleasant, SC? Crosby Insurance Group understands the unique financial landscape of the area. We help you navigate local regulations and factors, ensuring your retirement plan aligns with your specific goals. Contact us for a free consultation and secure your financial future.
