How to plan for healthcare costs during retirement

An elderly man helps his wife down the front steps while carrying a suitcase.

Planning for retirement should include planning for healthcare costs.

It's time to stop thinking of retirement planning only in terms of our investments. Retirement changes your life, and requires solid planning. How will we spend our time, not just our money?

How are we to maintain our health—one of the most valuable things we have—when we have limited control of it?

Also beyond our control—healthcare costs which may continue to increase. However, by being better financially prepared for these increases, we may at least be able to better control our own budgets.

Planning for retirement should also include questions like: If I need knee replacement surgery, can I afford it? Or, If I require hospitalization while traveling abroad, will it be covered? Another costly possibility: long-term care. More than half of all Americans ages 65 and up will need some type of long-term care.1

Keep healthcare costs top of mind as you set your retirement budget. Besides rising costs, an unexpected health event can set you back considerably, and Medicare alone may not carry the full burden.

How much will healthcare cost in retirement?

How much money will I need for healthcare in retirement? It's impossible to come up with one hard and fast number for all retirees, as one's health can change.

What about Medicare?

Medicare and retirement are often linked together, and while Medicare beneficiaries are often retirees, too, many mistakenly believe it will cover all healthcare costs—particularly the long-term care ones—in the retirement years.

That's a false assumption. Some may have a combination of Medicare and employer coverage, some may have another form of retiree health insurance and Medicare—but all should be prepared to pay for unexpected out-of-pocket healthcare costs.

How should I plan to pay for healthcare in retirement?

A good way to plan for healthcare costs in retirement includes adjusting for inflation and setting aside a reserve for the unexpected events. The average costs of long-term care rise more than 5 percent each year.2

Will you need health insurance after retirement at 62? If so, be certain to include early retirement health insurance costs, as well.

You can research the average cost of supplemental health insurance and use a healthcare costs calculator, opens new window to get a better picture of how your healthcare costs might stack up in retirement, with Medicare and financial planning included.

While these tools can help with estimates, you should consult your financial advisor for assistance with your specific needs.

While it may seem complex on paper, all of these components are critical as you plan for the most financially and physically healthy retirement lifestyle possible. By planning ahead, you may help ensure that any future complications in health don’t also present an impossible budget demand.


  1. Favreault, Melissa, Dey, Judith, “Long-Term Services and Supports for Older Americans: Risks and Financing Research Brief,” U. S. Department of Health & Human Services, last accessed April 19, 2018,, opens new window
  2. “US Health Care Inflation Rate,”, last accessed April 19, 2018,, opens new window

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