Most health care costs in retirement are a bill, not a shock: Matching recurring expenses with guaranteed income

Key takeaways:

• Health care costs are one of the largest and most difficult-to-estimate expenses many clients will face in retirement, and many aren't sure how they’ll pay for it. 
• Pairing recurring health care expenses with guaranteed income from certain types of annuity products may help clients better prepare for those costs. 
• Planning conversations around health care can help financial professionals build more comprehensive retirement income strategies while strengthening client relationships.

07/10/2026 — Most clients know health care will be one of their biggest expenses in retirement. What many don't know is how much it will cost—or how they'll pay for it.

Nearly three-quarters of adults say spiraling health care costs rank among their top retirement fears, according to  Nationwide's 2025 Health Care Survey, powered by the Nationwide Retirement Institute®. And for good reason. The same survey found that two-thirds can't estimate what they'll spend on health care in retirement, making it difficult to plan for an expense they know is coming but can't easily quantify.

For financial professionals, helping clients prepare for those costs is becoming an increasingly important part of retirement planning. The conversation isn't just about estimating future expenses. It's about helping clients incorporate health care costs into a comprehensive retirement income plan.

For some clients, annuities may be part of that strategy. Guaranteed income from annuities can help create a dedicated source of cash flow for recurring expenses, including health care-related costs that may continue throughout retirement.

Most health care spending in retirement is a rising, recurring expense

When clients think about health care costs in retirement, many picture a major medical event. In reality, much of retirement health care spending comes in the form of recurring expenses: Medicare premiums, prescription drug coverage, copays, and ongoing medical costs that show up month after month.

The total can be significant. Some estimates suggest that an average 65-year-old couple retiring today could spend as much as $428,000 on health care throughout retirement, according to the Employee Benefit Research Institute (EBRI).

That figure is a reminder that health care isn't just an emergency expense—it's a regular part of many retirees' monthly spending.

As financial professionals help clients build retirement income plans, it may be helpful to think about health care costs the same way. Essential expenses often require dependable sources of income to support them, especially when they're expected to continue for decades. Annuities may be one way to help address that challenge.

Health care costs don't stop—your clients' income shouldn't either

Many clients worry about whether their savings will last throughout retirement. Rising health care costs can add to those concerns, particularly for clients who are unsure whether their savings will be enough to support both their lifestyle and future medical needs.

Those concerns aren't unfounded. Nationwide's 2025 Health Care Survey also found that 51% of adults say medical or health-related expenses have drastically reduced how much they've been able to save—or expect to save—for retirement.

One way to help address those concerns is to create a dedicated source of income for health-care-related expenses.

Guaranteed lifetime income from an annuity can be earmarked specifically for health-care-related costs, helping provide a stream of income that continues for as long as the client lives. 

It can be helpful to think about retirement income in layers. Social Security and pension income may form one layer that helps cover essential living expenses. Annuity income can form another—one dedicated to helping cover Medicare premiums, prescription drug costs and other recurring health-care-related expenses.

This approach may also help reduce the need to rely solely on portfolio withdrawals to cover ongoing health care costs, particularly during periods of market volatility. With a portion of those expenses supported by guaranteed income, clients may have greater flexibility in how they use other retirement assets.

How guaranteed income may help with stability during market volatility

Health care expenses tend to rise over time, often faster than inflation. Markets, meanwhile, move in cycles. When those two realities overlap, clients may face difficult decisions about how to pay for health care without disrupting their long-term retirement strategy.

A medical expense may arrive in the same year markets are down, forcing clients to consider whether to sell investments at lower values to cover costs they can’t delay.

The financial impact of health care costs often begins well before retirement. Unexpected medical expenses can create additional financial strain, especially for households that are already balancing current needs with long-term retirement goals. Nationwide research found that 44% of Americans couldn't cover an unexpected $5,000 out-of-pocket medical expense, and more than 1 in 10 have already tapped retirement savings early to pay for medical costs.

Guaranteed lifetime income from certain annuities can provide a more stable source of cash flow for health care expenses. When income is designed to continue regardless of market conditions, it can be used to help cover health care-related expenses without relying entirely on portfolio withdrawals.

That approach can be especially helpful in a down market. If a client faces a significant medical bill when portfolio values have fallen, a dedicated stream of guaranteed income may reduce the need to sell investments at an unfavorable time.

For financial professionals, this "shock-absorber" idea can be a useful way to frame the role of annuities in a retirement income plan. Clients can continue investing for long-term growth, while using protected income to help cover essential health care costs that can’t wait for better market conditions.

Turning health care concerns into planning conversations

Financial professionals can help clients move from uncertainty to a plan by keeping a few key principles in mind:

Start with the concerns clients already have.

Most clients already recognize that health care will be one of their largest expenses in retirement. The opportunity isn't to convince them it matters—it's to help them understand what those costs could look like and how they can prepare for them.

Put real numbers behind the conversation.

Tools like Nationwide's Health Care and Long-Term Care Cost Assessment can help estimate future Medicare premiums and out-of-pocket costs, giving clients a more personalized picture of their potential expenses. Those estimates can also be incorporated into retirement income planning.

Expand planning beyond health care costs.

Questions about health care often lead to broader discussions about Medicare, long-term care and other retirement risks. Helping clients navigate those issues reinforces the value of comprehensive retirement planning. It's about building a plan that reflects each client's unique goals, concerns, and financial realities.

Show how annuities can support the plan.

As we've explored throughout this article, guaranteed lifetime income from certain annuity products can help create a dedicated source of income for health-care-related expenses in retirement. 

Depending on a client's goals, guaranteed lifetime income through annuitization or an optional income rider available for an additional cost may be appropriate. Other solutions, including fixed indexed annuities and registered index-linked annuities (RILAs), may appeal to clients seeking growth potential with a level of downside protection while planning for future health care needs.

Matching recurring expenses with reliable income

Helping clients prepare for health care expenses may be one of the most personal and emotionally charged retirement planning conversations you'll have with your clients. The costs are rising, they're ongoing, and they're often difficult to estimate, making it challenging for many clients to know how much to plan for.

By helping clients understand those expenses and exploring strategies to help address them—including guaranteed lifetime income from certain annuity products when appropriate—you can build retirement income plans that account for one of retirement's most significant and often underestimated expenses.

By addressing health care costs alongside broader retirement income planning, you can show clients that you're building a retirement plan around their real-life concerns, long-term goals and the realities they may face throughout retirement.