Don’t forget to include Medicare in your retirement plan

Medicare expert explains to senior how to include Medicare in retirement planning.

The average couple looking to retire in 10 years or so can probably count on spending nearly half a million dollars on their combined healthcare expenses after retirement.

A 2015 study by HealthView Services estimated that a 55-year-old couple retiring in 10 years could expect to spend an average of $463,849 in lifetime healthcare costs.1 It's no wonder, then, that another survey found that more than half of workers aged 50 or older worry that they won't have enough money to pay for their healthcare once they retire.2

Your ability to afford healthcare in retirement may depend a great deal on how well you factor those costs into your retirement planning.

That plan should include an assessment of the sources you will use to cover your healthcare costs. Most likely, there may be some combination of Medicare, retirement savings and private insurance.

Medicare coverage is neither free nor complete

Medicare pays for about 60% of healthcare expenses for the people it covers.3 It does not pay for common healthcare expenses including long-term care, hearing aids, dentures, routine foot care or exams for prescription glasses.4

Medicare has four main parts: Part A covers hospitalization; Part B covers medically-necessary, and preventive services; Part C consists of Medicare Advantage plans, which provide Medicare coverage through private companies; and Part D is prescription drug coverage. Each part has different cost implications for the Medicare recipient.5

Per the site, “Most people don’t pay a monthly premium for Part A,” but there is a $1,340 deductible in 2018 for each benefit period.6 Parts B, C and D charge monthly premiums, and enrollees may also incur additional expenses such as a yearly deductible, coinsurance and copayments.

Retirement savings and private insurance may help fill the gap

One strategy that may help make your retirement healthcare more affordable is to put off your retirement date. Delaying your retirement may give you more time to build up your savings. Also, waiting to collect your Social Security benefits until after you reach full retirement age can increase the amount of your monthly check until you hit age 70. On the other hand, retiring at 62, the minimum age of eligibility, can reduce your benefits by as much as 30%.7

You can use some of that extra savings for Medicare premiums, out-of-pocket healthcare expenses or supplemental insurance.

Private insurers sell Medicare supplement insurance, also known as Medigap, to help pay some of the costs not paid by Medicare.8 To purchase a Medigap policy, you must have Medicare Part A and Part B. You pay a monthly premium for the policy, in addition to your Part B premium for Medicare. As long as you pay the premium, your Medigap policy can’t be cancelled.

A financial adviser can help evaluate your potential retirement healthcare needs, plan a budget and consider all your funding options. You can also find healthcare cost estimators online to give you a rough idea of your targets.


  1. “2015 Retirement Health Care Costs Data Report®,” HealthView Services, last accessed April 13, 2018,, PDF opens new window
  2. Laura Skufca, “Planning for Health Care Costs in Retirement: A 2014 Survey of 50+ Workers,” American Association of Retired Persons, last accessed April 13, 2018,, opens new window
  3. “Medicare 2018 Costs at a Glance,”, last accessed April 13, 2018,, opens new window
  4. “What Part A & Part B doesn’t cover,”, last accessed April 13, 2018,, opens new window
  5. “Medicare 2018 Costs at a Glance”
  6. Ibid.
  7. “Early or Late Retirement?” Social Security Online, last accessed April 13, 2018,, opens new window
  8. “What’s Medicare Supplemental Insurance (Medigap)?”, last accessed April 13, 2018,, opens new window

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