According to an Employee Benefit Research Institute (EBRI) study, the amount needed at 65 to cover health care costs for couples varies from $157,000 to $392,000.

For those who had employer health care coverage, retirement may mean paying more for medical insurance (Medicare Parts B and D and Medicare Supplement policies). Even with insurance, some expenses will be paid out-of-pocket. Also, chronic or acute illnesses may mean increased significant and unexpected out-of-pocket costs.

In one scenario, a 70-year-old client had some serious problems with her feet, and she discovered that Medicare did not cover routine podiatrist visits. Or, as an even bigger surprise, she had a major surgery and realized that she faces a deductible and a 20 percent copay on many expenses. As you age, you can expect to require more health care, and due to inflation, costs will also continue to increase. How can you factor health care into your retirement plan and avoid a situation like this?

Choose the Right Insurance

Planning for unexpected health care costs begins with choosing appropriate insurance. For those aged 65 and above who are eligible for Medicare, it means understanding options under Medicare and choosing insurance to supplement Medicare. Take a look at your eligibility and premium estimates to get an idea of what to expect.

Acquiring comprehensive insurance helps to make costs more predictable and avoid any extraordinary expenses. Medicare has no cap on out-of-pocket expenses. To limit costs, you will need to purchase a Medicare supplement. Also, Medicare doesn’t cover dental or vision costs and prescriptions aren’t provided for unless you purchase a drug-benefit plan. Research your supplemental coverage options to fill in the gaps and ensure that your healthcare costs won’t eat up your retirement savings.

Reconsider Retiring Early

If you decide to retire prior to turning 65, you will need to find pre-Medicare coverage. It can be challenging to find coverage that is affordable. By waiting until you turn 65, you will qualify for Medicare and not be forced to obtain other health insurance to cover you during the transition.

Build a Contingency Fund

A critical part of planning is ensuring that sufficient funds are available at retirement to meet expenses. Determining costs is not a simple feat, as they vary quite a bit from individual to individual. When estimating health care expenses, you can build in a lump sum amount to the amount needed at retirement, or calculate annual costs each year. Also, it’s important to consider the inflation factor appropriate for medical expenses.

Take Care of Yourself

While you can’t plan for everything in life, the better you take care of yourself, the less likely your healthcare costs will run you into the ground. Statistics show that if you exercise, keep your weight at a healthy level, and stay away from smoking, you will have fewer health problems and therefore fewer health expenses.

Have you factored healthcare costs into your retirement plan? To learn more, download our free checklist, 12 Steps to a Successful Retirement today. If you need help, call my office at 770.249.7424 or email me today at

About Beau Henderson

Beau Henderson is a financial advisor, author, coach, radio personality, and CEO of RichLife Advisors. He has helped over 3,000 clients to not just improve their relationship with money, but to live the life of their dreams.

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