Retirement Planning: How to finance medical care after retirement

Retirement is a cherished phase of life, but it comes with its own set of financial challenges, especially when it comes to healthcare expenses. As we age, medical care becomes an integral part of our lives, and planning for it is paramount. In this guide, we will walk you through the crucial steps to finance your medical care after retirement, tailored for Indian audiences.

Before delving into retirement healthcare planning, it's essential to know about India's healthcare system. While India boasts world-class medical facilities, healthcare costs can be substantial. Therefore, a robust financial plan is necessary to navigate this terrain.

Healthcare costs in India

In India, high healthcare costs make comprehensive health insurance a necessity. Ensure coverage for yourself and your spouse, including critical illness protection for major health issues. Commence retirement planning early, focusing on dedicated funds like pension plans or provident funds. These funds serve daily expenses and safeguard against unforeseen medical emergencies.

Married couples can opt for cost-effective family floater health insurance. These policies cover both spouses under one plan, offering ample coverage at lower premiums. Before retiring, review employer-provided health benefits. Some companies extend post-retirement health coverage, partially or fully. Assess whether additional insurance is needed. Explore government schemes for senior citizens like CGHS and RSBY, which significantly reduce healthcare expenses.

Prioritise a balanced diet, regular exercise, and health check-ups to reduce long-term medical costs. Create a detailed retirement budget, considering inflation and expected medical costs. Ensure sufficient funds for healthcare. Explore long-term care insurance to cover extended medical care in the face of chronic illnesses or disabilities during retirement.

Government healthcare schemes

Central Government Health Scheme (CGHS): Access a wide network of empaneled government and private hospitals with cashless facilities.

Employees' State Insurance Scheme (ESIS): Retirees covered under ESIS during employment can continue to avail medical benefits.

Rashtriya Swasthya Bima Yojana (RSBY): Though not specific to retirees, eligible senior citizens from economically weaker sections can benefit.

Private Healthcare Schemes

Private Health Insurance: Insurers offer health plans tailored for retirees, covering hospitalisation and outpatient services.

Critical Illness Insurance: Provides a lump sum upon critical illness diagnosis.

Long-term Care Insurance: Gradually gaining popularity, covers extended care services.

Annuity Plans with Healthcare Riders: Offers additional medical coverage during retirement.

Other schemes and investments

Voluntary Provident Fund (VPF): Allows voluntary higher contributions towards EPF for healthcare expenses.

Senior Citizen Savings Scheme (SCSS): Offers higher interest rates and tax benefits for healthcare funding.

Public Provident Fund (PPF): Can be partially withdrawn after the 6th year for medical emergencies.

Equity Mutual Funds and SIPs: Potential higher returns for healthcare funding.

Fixed Deposits (FDs) and Recurring Deposits (RDs): Serve as income sources for healthcare expenses.

Pradhan Mantri Vaya Vandana Yojana (PMVVY): Provides a guaranteed pension for ten years, part of which can be used for healthcare.