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Healthcare in Retirement: Plan and Save for Your Future

Generally, life expectancies have been improving overall, but with that comes an increased need for financial support in retirement to pay for healthcare services. One may believe that having health insurance or Medicare will cover medical costs incurred in their retirement, but not all costs are covered. Planning as soon as possible can help prevent unexpected expenses and financial hardship.

You can look forward to these topics in today’s read:

Why worry about healthcare after retirement, today’s outlook on healthcare costs

How much do I really need, determine your possible health care costs in retirement

No surprises, consider the unexpected in medical expenses

Now that you know why it’s important, discover how to start saving now

If saving is not attainable, learn how can you take action to lower costs

Healthcare in retirement

Many adults worry about the cost of health insurance as they approach retirement, often prolonging employment to avoid unnecessary costs. Financial instability also leads to avoiding medical care, as many elderly or retired adults cannot afford healthcare costs with insurance. Adults in the pre-retirement age, about 50 to 64, are often concerned about affording healthcare after they retire.

According to the Employee Benefit Research Institute, 41% of working adults didn't believe they would have enough money saved in 2019. On average, about 10% of household incomes go to medical costs among those of pre-retirement age, which can increase with age.

Save on Your Health Insurance in 2024
On insure.com Website

Estimating medical costs

Health insurance may not cover all medical expenses. An individual may incur monthly premiums, copays, potential out-of-pocket drug costs, dental, vision, and assisted living expenses in retirement that might not be covered under Medicare. According to the Employee Benefit Research Institute, a man who retired in 2023 should have about $166K in savings and a woman would need to save close to $200k for a 90% probability of being financially set regarding healthcare costs.

Unexpected costs to consider

Assisted living, skilled nursing care, and long-term care are three types of care that many retirees may need. The expenses may come unexpectedly, and your health insurance may not cover it. Assisted living provides regular check-ins and medication distribution and ensures access to food but doesn’t provide constant supervision. The cost of a private room in an assisted living community varies significantly by state and is not covered by Medicare. Long-term care offers continuous care for an indefinite period and is also not covered by Medicare.

In many cases, you may qualify for Medicaid to help cover long-term care expenses, but it’s best to plan if possible. Skilled nursing care may be needed for a short time following a surgical procedure or medical condition. Medicare will cover skilled nursing for up to 100 days. The online Genworth tool can help calculate the cost for you.

Saving for retirement medical expenses

Saving for retirement can be difficult but there are things you should try to start doing as soon as possible to prepare:

  • Estimate how much you will need. Use the Medicare Online tool to create an estimated budget for yourself and your spouse and plan to save more if you think assisted living or long-term care may be in your future. Review your current health status and family history when planning for retirement. If you have a strong family history of cancer or dementia, expenses could be higher.
  • Open a medical or health savings account. Consider a Health Savings Account (HSA) contribution in your pre-retirement years. Once you become Medicare-eligible, you can no longer contribute to a HSA.
  • Seek assistance from a financial advisor. Contacting a licensed financial advisor to assist with your saving strategy may help you determine the best way to save and invest money, pay off debts, and lower your costs in retirement.

Lower healthcare costs in retirement

Saving for retirement may not be feasible for everyone, but there are steps you can take to help with medical expenses upon retirement. Some saving alternatives include the following:

Stay healthy

Stay in shape and maintain a healthy lifestyle. Diet, exercise, and prevention measures are essential for a long, healthy life, avoiding chronic conditions and diseases, and keeping healthcare costs low in the golden years.

Prescription drug programs

Take advantage of prescription drug discount opportunities. Contact the pharmaceutical company to see if discounts are offered, and check with your pharmacist. Some local pharmacists offer discounts to senior citizens and those who need help to afford to pay the full price. Discount programs such as Good Rx provide substantial savings, and local municipalities may also offer discounts to their residents.

For example, New York State provides income-based prescription discount cards available online or from a city, town, or county government. The state also offers discounts for everyone regardless of income and savings ranging from 60% for generic and 30% for brand-name drugs.

Review medical bills

Pay special attention to your medical bills to ensure that costs are displayed correctly and you are billed correctly. This can ensure you don’t have any unexpected or unnecessary costs. Call the provider’s billing department to seek an explanation for any item you don't recall or understand. Many healthcare providers offer payment plans and are willing to work with those who can't pay the entire bill at once.

Enroll in a Medicare Advantage Plan

Medicare Advantage (MA) plans may help cut costs. An MA plan can reduce the savings you'll need, although they have pros and cons to consider before enrolling.

Consider other insurance plans

You may be able to extend your insurance with your employer under the Consolidated Omnibus Budget Reconciliation Act (COBRA). However, the premiums can be costly. You can continue health coverage under your spouse’s employer plan if they are still working. Individual plans are also available through the Marketplace.

Apply for Medicaid

If you are low-income or have experienced financial hardships, you may want to see if you qualify for assistance through your state’s Medicaid program. To apply, go to Medicaid.gov and click on your state.

When retired, you want to relax without the worry of healthcare costs. To make the most of your retirement years, prepare for retirement early and explore the options for saving for the future. Open a Health Savings Account (HSA) or IRA to take advantage of tax benefits while securing your retirement years.


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