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Insurance Needs in Retirement


Once in retirement, obviously your financial needs will change drastically. Instead of saving a portion of each paycheck, you’ll be trying to figure out how to portion out what savings you did accumulate. And your insurance needs will change too. Here’s a look at four different types of insurance retirees need, along with one that they don’t, from the financial experts at The Motley Fool.


Once you hit 65, you’ll definitely want to sign up for Medicare. Unless your previous employer covers retirees, your only health insurance options besides Medicare is to pay out-of-pocket or get private insurance, both of which would be exceedingly expensive. Enrolling in original Medicare, including both Part A and Part B, should be a definite for most retirees.

Medicare Advantage or Medigap

Original Medicare includes several basic medical expenses, but there are some pretty significant coverage gaps too. To help provide missing coverage, many retirees either get a Medigap or Medicare Advantage plan. Medigap is a supplement to original Medicare, while Medicare Advantage replaces it. Even if you’re a healthy 65 year old, it’s a good idea to sign up for one these plans during the initial enrollment period. It may become very difficult to sign up for a supplemental plan in the future if your health should decline. For example, if you miss the initial enrollment period, Medigap plans are allowed to turn you away because of preexisting conditions. These plans come in many shapes and sizes, so finding one that suits your needs is very likely.

Long-term care insurance

One of the coverage areas that most forms of Medicare skimp on is long-term care. Medicare only covers LTC costs that have a clear medical component, meeting certain requirements. So if you’d like Medicare to pay for a nursing home stay, you have to have spent time in a hospital first and have a doctor confirm your need for a skilled nursing facility. Even in this case, Medicare only covers the first 100 days. Typically, long-term care settings are very expensive, so having a plan to pay for it is crucial. LTC insurance is definitely the easiest way to prepare, and the sooner the better. A healthy 50-something signing up for long-term care insurance will have a much lower premium than someone in his 60s and/or in relatively poor health. If you’re in particularly bad shape, you may not be eligible for it at.


An annuity is an insurance product that protects you against running out of money. In exchange for a lump sum of money, an insurance company promises to make regular monthly payments, usually beginning at a later date. How big of payments and for how long depends on the type of annuity you purchase, and there are dozens of options to choose from. For many retirees, a fixed lifetime annuity is the best option. These products give you a set payment each month for the rest of your life. Having a steady, guaranteed source of income in retirement can do wonders for both your budget and your state of mind.

Annuity products are not for everyone though. They are typically best for retirees who want to feel completely secure about their retirement income. While a better return is usually achieved by living off the investments in your retirement savings account, depending on your level of risk tolerance and your comfort level with your investment decisions, an annuity product might be the right choice for you.

Bonus: Life insurance (the one you probably don’t need)

If you have a family, it’s likely that you have a life insurance policy in place to take care of your loved ones in the event something catastrophic happens to you. But, by the time you reach retirement, your kids have likely grown up and are living their own lives. If no one is depending on you for income anymore, then you really don’t need a life insurance policy. Your money could be put to better use, like towards long-term care insurance,  for example.

Written by Rachel Summit

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