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Preparing for Healthcare Costs in Retirement

Preparing for Healthcare Costs in Retirement

The Importance of Healthcare Expenses in Retirement

Retirement planning is like embarking on a journey, and while we often focus on destinations like travel, leisure, or spending time with loved ones, there’s a vital aspect that’s sometimes overlooked—healthcare expenses in retirement.

As we age, healthcare costs tend to increase, and being prepared for them is just as important as having a well-paved financial path to your dream retirement.

This article explores the often-neglected realm of healthcare expenses in retirement and offers strategies for managing and budgeting for these costs.

The Rising Tide of Healthcare Costs

Healthcare costs tend to increase as we age, and this upward trajectory shows no signs of slowing down.

According to the latest Fidelity Retiree Health Care Cost Estimate, a couple retiring at age 65 can expect to spend over $315k on healthcare expenses throughout their retirement.

This staggering figure doesn’t include over-the-counter medications, long-term care costs, or most dental services.

“Since these costs will likely consume a significant portion of your retirement budget, you need to plan for them,” advises Scott Ente, Senior Vice President of Investments at David Lerner Associates, Inc.

Strategies for Managing Healthcare Costs in Retirement

  1. Start Early
    Just like saving for retirement itself, planning for healthcare expenses should start early.

    Consider making contributions to a Health Savings Account (HSA) if you’re eligible, as it offers tax advantages and can be used for qualified medical expenses.

  2. Understand Medicare
    Medicare is a critical component of healthcare in retirement, but it doesn’t cover everything.

    The realm of Medicare is vast and filled with information to absorb. You’ll need to familiarize yourself with essential components like Medicare Parts A, B, and D, in addition to understanding Medicare Advantage and the supplementary “Medigap” insurance plans available.

    After understanding the various parts, consider purchasing supplemental insurance to bridge the gaps in coverage.

  3. Budget for Premiums & Out-of-Pocket Costs
    Include healthcare premiums in your retirement budget. These premiums can significantly impact your monthly expenses, so knowing what to expect is crucial.

    Even with Medicare, you’ll still have out-of-pocket expenses like deductibles, copayments, and coinsurance. Budget for these costs to avoid unexpected financial strain.

  4. Long-Term Care Planning
    Long-term care is one of the most substantial healthcare expenses in retirement.

    According to the Department of Health and Human Services, an individual turning 65 today has about a 70 percent chance of requiring long-term care at some point. The best way to approach this matter is to plan for it.

    Investigate long-term care insurance options or explore alternative strategies, such as setting aside funds specifically for this purpose. This could mean purchasing a traditional long-term care insurance policy or a hybrid insurance product that combines permanent life insurance with an LTC rider.

  5. Healthy Lifestyle
    While it may seem like common advice, it’s worth emphasizing.

    If you proactively maintain an active lifestyle and prioritize a healthy diet, you’re likely to incur lower healthcare costs than someone who neglects these aspects and engages in unhealthy habits, such as smoking.

    This tip is invaluable for curbing healthcare expenses at any stage of life. Furthermore, by initiating these practices now, you’ll cultivate positive habits that will continue to benefit you during retirement. If you’re uncertain about how to commence your journey toward improved health, consulting with your doctor to identify the best initial steps is a wise approach.

    Preventive care (regular check-ups) can help catch health issues early, reducing the need for expensive treatments later on.

  6. Consider Relocation
    Some areas have higher healthcare costs than others.

    When planning your retirement, consider relocating to an area with a lower cost of living and healthcare expenses.

  7. Review Your Plan Annually
    Healthcare and insurance plans change, so it’s essential to review your coverage and expenses annually during the Medicare Open Enrollment Period.


In conclusion, while planning for retirement is undoubtedly exciting, it’s essential to address the often-overlooked aspect of healthcare expenses. By starting early and understanding your options, you can embark on your retirement journey with confidence, knowing that you’re prepared to handle whatever healthcare costs may come your way. After all, a healthy retirement is a happy retirement.

Navigating healthcare expenses in retirement can be complex, and it’s not something you should tackle alone. At DLA, our expertise in retirement planning means we can help you develop a comprehensive plan that accounts for healthcare costs. We can assess your unique situation, recommend insurance options, and help you develop a budget that ensures your healthcare needs are met without jeopardizing your financial security.


Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

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