Meeting the Challenges of Health Care Expenses

thinking about retirement

Did it ever cross your mind how much you’ll spend for health care expenses in retirement? You probably think it won’t cost that much and it would be easy to face it if ever you’ll cross that issue later on.  However, are you sure it would be that easy? Are you confident that you can handle it? Well, think twice!

Many people tend to underestimate health care expenses. The truth is, it is one of the major retirement expenses that can make you cry. Why? Because it can take up a big chunk of your retirement budget and even use up everything you have, way before you even need long term care.

How much do I need for my healthcare expenses?

According to Fidelity Investment’s  2017 Retiree Health Care Cost Estimate, a 65-year old couple, retiring in the current year, will need to cover health care and medical expenses throughout retirement. The 2017 estimate is $275,0001, a six percent increase over last year’s estimate of $260,000. That includes Medicare premiums, co-payments, deductibles and out-of-pocket expenses for prescription drugs.


However, if you will need glasses, eye exams, hearing aids, dental care, and long term care, those numbers might not be enough, and you will need more. And if you retire early, the numbers will be of course even higher.

How can I cope with a huge health care expenses?

Now, the question is“Do  you need to have the whole $275,000 on hand and allocate it alone to health care, once you retire?” If you can have it ready, of course, that would be great! But the amount is too huge that it seems impossible to most of us to swing it. Therefore, you don’t have to do that. There are ways to sustain your health care expenses and reach the amount you need by using the resources that you already have and prepared. Social Security benefits, employer pensions if you have one, the money you make working in retirement and your withdrawals from savings are just some of the possible resources where you can get the payment for your medical needs.

You can also turn large, unpredictable expenses into regular monthly premium payments by means of Medicare and Medicare Supplement plans. I included Medicare Supplement plans, also known as Medigap plans, not because I want to boast or promote it but because of the large coverage gaps in Medicare. Medicare leaves a considerable amount of deductibles and co-payments that are huge enough to cause burden in your retirement budget.  So what is the role of Medicare Supplement plans? (if you  would ask). Well, it will be the one that will cover those Medical costs that your Original Medicare didn’t. It will pay all or part of your deductibles, co-payment, and co-insurance. You just have to be wise in choosing plans.


Utilize Health Savings Account (HSAs) to save for your medical expenses. It also offers tax advantage like investment earnings have no tax; qualified medical expenses are not taxable, and savings are deducted from your taxable income when they’re made. Because of these tax advantages, you should save as much as you in HSAs while you are still working.
If you plan your healthcare, you would think it would be wise to extend your working years, which is a very reasonable idea. By working longer, you won’t only benefit from the subsidized medical coverage from your employer, but also have a longer time to allow your social security and saving to grow even more.


There’s a lot to think and consider for your retirement, but if you start planning early, you will have ample amount of time to prepare and be confident to leave the workforce in due time.

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