Are you prepared to live to 100?

AUBS report found that 30 percent of wealthy investors plan to live to 100 – a milestone that deserves a celebration. But living longer carries financial implications: 52 percent of respondents are anxious about rising healthcare costs.

They’re right to be concerned: Research conducted by UBS (PDF, 479

KB) shows that a 65-yearold couple needs to have saved between $300,000 and $600,000 at the start of retirement to cover future healthcare expenses. Yet, only 12 percent of Americans have incorporated healthcare expenses into their retirement plans, according to a study in The Journal of Retirement.

Neglecting to prepare for mounting medical expenses as you age can mean not achieving your lifestyle objectives – and possibly upsetting your legacy goals. Your UBS Financial Advisor can help you create a strategy that anticipates the financial challenges that comes with living longer. As you head into the planning process, it may help to keep in mind these five key considerations:

1. Prepare for expenditures not covered by Medicare.

Misunderstanding what Medicare does and doesn’t cover can be costly. Healthcare expenses in retirement can include not only Medicare premiums but also deductibles, copays and out-of-pocket expenses. Importantly, Medicare does not cover long-term care.

2. Include long-term care in your planning.

An analysis by UBS shows that 32 percent of households with a well-planned $1 million portfolio are likely to fail because they do not account for long-term care, also known as custodial care.

“An unplanned medical situation can take you by surprise and cut deeply into retirement savings,” Jeff LeForge, UBS Investments Strategist Americas says. “It’s natural to hope a debilitating illness will never happen to us. But the longer we live, the greater the chance we may be affected by Alzheimer’s, dementia or another chronic condition.”

LeForge continues: “Self-funding isn’t a viable plan for most Americans. Think about

incorporating risk-mitigating products like life insurance and long-term care products into your financial retirement plan.”

3. Be prepared for health care cost inflation.

HealthView Services, a consulting firm specializing in tracking healthcare costs, projects an average annual healthcare cost inflation of 4.2 percent for the foreseeable future.

“You should extend the duration of your strategy with more assets that can help you meet rising health care costs and the potential for long-term care needs,” LeForge says. “You may also want to periodically review your spending habits once you’re retired to take into account longer life expectancy to avoid outliving your assets.”

4. Anticipate your changing income needs in retirement.

If you are like most retirees, your expenses will be highest during the early and later years. Travel, hobbies and new experiences are likely to dominate spending right after retirement, followed by a period of relatively lower activity. In the latter part of retirement, expenditures for care can take over as health issues and the associated expenses increasingly become the focus.

“Retirement spending rarely follows a straight-line path,” LeForge says. Integrating age bands into your thinking will help you arrive at a realistic plan for drawing down your retirement savings.

5. Approach work-life balance with an open mind.

As much as you might be looking forward to retirement, don’t be surprised if you find you miss work once you leave your job. You might be concerned about losing your social connections, your willingness to take on new challenges or your ability to stay mentally agile.

LeForge says: “Consider transitioning slowly into retirement by cutting back on your hours rather than leaving your job entirely. The additional work years can help you accrue more assets.”

Regardless of the future you envision, preparation is essential. It’s never too early to begin planning for healthcare costs in retirement, speaking with your advisor about your financial plan and communicating with family members about what you want for your life in the future.