Don’t let surprise medical bills drain your retirement

To protect your savings if you suffer an illness or injury which leaves you unable to work, make sure you have disability insurance.

A recent survey by BenefitsPro.com found which only one-third of Americans currently have a disability policy. Most disability policies which you get through your employer usually cover 40 percent to 60 percent of your salary. This specific kind of insurance provides steady payments if you become unable to work in addition to also keeps you via tapping your retirement savings.

“Think about how much time you think about reviewing your investment portfolio, how you make sure you have auto insurance,” Francis said. “Disability insurance is usually even more important than both of those put together.”

If you have no some other option than to take money via your retirement accounts to pay for medical expenses, watch out for tax penalties. Normally you’ll be hit that has a 10 percent tax penalty, in addition to paying income taxes, on money you withdraw via tax-deferred retirement plans before reaching age 59½.

“What most people are aware of is usually which they will owe income taxes upfront (on early withdrawals) nevertheless come tax time if they’re under 59½, they’re going to add a 10 percent tax bill,” said IRA consultant Denise Appleby of RetirementDictionary.com. “So at which time, you want to gather your medical bills in addition to also receipts for health care expenses in addition to also see if you qualify for any exceptions.”

Consult that has a financial advisor or accountant, or go to IRS.gov in addition to also look up Publication 590B to find the few medical exceptions which apply.

However, which’s a last resort. Take the some other steps first to help make sure unforeseen medical bills don’t drain your retirement.

More via Retire Well:
What to do if your life insurance is usually about to expire
Pay down these three debts before you retire
Retirement tricks for the self-employed

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