Accounting for Healthcare Costs in Retirement

Taking the Hassle Out of the Holidays

For many people, one of the biggest concerns in retirement is medical expenses. It’s easy to understand. According to Ron Mastrogiovanni, CEO of HealthView Searches, a research firm which provides healthcare data to financial advisers, healthcare costs are on the rise. In general, healthcare costs are increasing 5-7% per year.

In a recent white paper from HealthView Services, data indicates healthcare costs will exert a heavy hand on the retirement landscape now and in the future, too. A healthy couple retiring at age 65 this year will require a little over $266,000 to pay for the costs of Medicare Parts B and B and supplemental insurance for their lifetime. Likewise, for a healthy couple that is 55 years old and retiring 10 years from now, those costs will shoot up to roughly $320,000.

That’s without factoring in all healthcare costs, too. Again, for a healthy couple retiring at 65 this year, total healthcare costs will be sizable. When you factor in dental care, vision care, co-pays, and out-of-pocket expenses, the couple’s total healthcare costs for their lifetime goes up to almost $395,000.

With these statistics, it’s important to start planning for your healthcare costs now.

What Steps Should I Take?

Here are some factors to consider:

Understand what Medicare covers – Some retirees will benefit from retirement healthcare coverage provided by their employer. But the vast majority of retirees will depend on Medicare for their healthcare expenses. According to Mastrogiovanni, Medicare will cover around 51% of total healthcare costs in retirement.

It’s important to understand what Medicare covers – and what it won’t cover. For instance, there are co-pays and out-of-pocket expenses for dental and vision care services which aren’t covered by Medicare. Long-term care expenses aren’t covered by Medicare, either. A supplemental insurance policy will help in meeting these costs.

Be knowledgeable of your health insurance options – Medicare Advantage plans take Medicare Parts A and B and supplemental coverage and put them into a single policy. Private companies manage this, and a Medicare Advantage plan may offer lower premiums or stronger benefits than just Medicare. But it does come with its limits. For instance, you may be limited to relying upon network providers for your healthcare needs.

Take time to investigate different private insurance options for supplementing Medicare, and your efforts will pay off. You could enjoy tremendous cost savings with this approach than if you just relied upon the traditional Medicare setup.

Factor in healthcare costs into retirement income planning – It’s important to plan ahead of time. You should weigh your medical expenses in tandem with other retirement expenses. Keep in mind that healthcare costs will vary by age, location, gender, and many other factors.

Once you have a rough idea of what your retirement healthcare costs may look like, it’s time to account for strategies to cover them. There are many income sources which retirees may draw upon for covering healthcare costs: personal savings, income from part-time employment in retirement, employer-sponsored benefits, health savings accounts, lifetime income payments and withdrawals from an annuity, and others.

Other Thoughts on Retirement Planning

Healthcare expenses are just one part of the retirement landscape. It’s important to plan for your retirement so you’re fully prepared for the later years and for peace of mind. And if you’ve already reached retirement, there’s no time like the present to take control of your circumstances.

At, we have a host of educational articles on many hotbutton financial topics: Social Security benefits, estate planning and retirement planning principles, annuities, life insurance, and more. Education is crucial – please use these articles to your benefit and to help you make sound decisions for your future.

If you’re ready for personal guidance, a no-cost consultation with a financial professional can help you. Use our Find a Licensed Advisor section to connect directly with an independent financial professional, and to request a personal strategy session to discuss your needs and goals. And should you have any questions or concerns, call 877.476.9723.

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