Planning for Retirement? What You Need to Know About Health Care

May 18, 2017

Planning for retirement can be an exciting time, but it can also bring some apprehension.


Though it should always be somewhere on your radar, if you’re within 10 years of retiring, it’s time to start seriously thinking about how life will look for you financially.

One of the most important areas is often the most overlooked.

Your healthcare costs.

Download now for free: 5 Things To Know About Medicare When You Turn 65

Some estimates state that a couple retiring at age 65 would need $245,000 of their own money to cover 20 years of out-of-pocket medical costs.

How ready are you to face retirement and healthcare costs?

Most common healthcare costs

People sometimes don’t put enough thought into the healthcare part of their financial planning, because they assume that their medical costs will all be covered by Medicare.

However, there are still costs associated with Medicare.

The three most common are:

  • Premiums for Medicare Part B. While it does cover physician’s costs, premiums are currently an average of $244 for a couple or $122 per month for a single person.
  • Medicare Supplemental Insurance. Also called Medigap, this insurance isn’t a requirement, but it’s highly recommended because it covers the gap left between what Medicare covers and what it doesn’t. It costs about $200 per month for a single person and $400 for a couple.
  • Premiums for Medicare Part D. This is your drug coverage and it costs approximately $50 a month for a single person and $100 for a couple.

When the costs for dental coverage and your out-of-pocket drug costs are added in, a couple can expect to pay somewhere in the neighborhood of $11,000 annually for their health care costs.

At least the expenses that can be expected. Keep in mind that these numbers don’t include the cost of any unexpected, long-term illness or health concern that comes up.

Expect the unexpected

No one wants to think about, let alone plan for, a serious illness.

The fact is, if an unfortunate situation were to come up, you’d be glad that you had a plan in place.

Not thinking about it won’t prevent it from happening.

The best way to be prepared for a long-term illness or an incapacitating injury is to incorporate a designated amount of money each month or year  –  however, it’s easiest for you to manage  –  for the purpose of covering a calamitous illness or injury and the aftermath.

A conservative estimate, which varies on a case-by-case basis, is to save between $5,000 and $10,000 per year.

Lowering costs

There may be some ways to potentially keep costs down.

  • Take care of yourself.  Things will happen that are out of your control. What you can do is be intentional about what you can control. Eat a healthy diet, get plenty of rest, and make sure there’s some physical activity in your day.
  • Look into Medicare Advantage. Also known as Medicare Part C, it’s similar to an HMO and can be used instead of standard Medicare. It’s generally cheaper, with lower or no premiums (because these plans are subject to a maximum out-of-pocket annual limit). One caveat is that the amount of premium you will pay is dependent on the region in which you live.

You’ll have greater peace of mind as you prepare for retirement if you have an adequate financial plan in place for your future health care needs.

Have you started to plan or save for your future health care needs?