Healthcare in Retirement

As you prepare for retirement, it is important to account for – and not underestimate – the cost of healthcare, as it is expected to make up 9% to 14% of the average older household’s spending. In 2019, a retiring couple can expect to spend $285,000 in healthcare and medical expenses throughout retirement.

While it may feel daunting to prepare for such an expense, it turns out that healthcare costs often fall into fairly predictable patterns for which you can prepare. The four primary factors that will impact healthcare costs are:


  • Your Current Health – Chronic conditions have a larger impact on medical spending than others. Many of these conditions tend to manifest in people by the time they are in their 50s or 60s, which can give them an idea of their future health risks and further help them plan. Typically, people are classified in one of three categories in terms of their health and their related potential healthcare costs:


    • Low risk – individuals do not smoke or are free of chronic health conditions.
    • Medium risk – Individuals might smoke, or visit the doctor a few times a year and have one or two chronic conditions.
    • High risk – Individuals smoke, or visit the doctor frequently or have two or more chronic conditions.


  • Supplemental Medicare Policies – It is estimated that Medicare will cover 50% to 60% of healthcare needs, so many people elect to purchase supplemental policies to help cover those costs not covered. Medicare Advantage and Medigap can help cover deductibles, co-pays, and out-of-pocket expenses, as well as dental care, glasses, and hearing aids that are not typically covered. While yearly minimums may be slightly higher with supplemental plans = $4,700 compared to $3,000 per year – the annual maximum paid by individuals can be significantly reduced with these supplemental policies – as low as $11,000 per year, as compared to up to $21,800 per year.


  • Your Income – Your income will impact how much you pay for healthcare coverage in retirement. Medicare Part A, which covers hospital visits, is premium-free, but premiums for Part B (doctor visits) and Part D ( prescription drug) are based on income. Premiums start to rise for modified adjusted gross income over $85,000 for single people or over $170,000 for married couple filing jointly.


  • Where You Live – Most healthcare expenses will fluctuate based on an area’s cost of living, cost of medical services, and levels of federal funding. These fluctuations can impact the cost of private insurance, Medicare Advantage premiums, and Medigap policy premiums.


In addition, your marital status, age at retirement, private medical insurance, and inflation also will impact your healthcare costs in retirement. These costs also can increase with age and healthcare inflation rates tend to be higher than overall inflation rates.

For peace of mind and confidence that you will have the funding available to cover your healthcare costs while enjoying retirement, schedule a complimentary meeting with Don today.

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