Paying for health care in retirement

If you’re concerned about rising health-care costs in retirement, you’re not alone:

3 out of 4 people agree that spiraling health care costs is one of their top fears in retirement¹

70% of adults are unsure or can’t estimate how much they expect to pay for health care costs in retirement¹

By one estimate, an average 65-year-old couple who retires could spend up to $325,000 on health care costs in retirement.²

Where does the money go?

• Medicare, supplemental Medicare plans and private health insurance; costs include premiums, deductibles, copayments and coinsurance
• Health care that Medicare and other health insurance may not cover, such as long-term care, dental care, vision care and hearing aids
• Prescription medications

5 ways to plan ahead

Consider these ideas.

1. Use our My Health Care Estimator tool to find out how much you may need to pay for health care in retirement. Answer a few simple questions. Then, contact your financial professional to discuss how to fit these costs into your retirement budget.
2. Factor in Medicare and other health-insurance premiums when setting your retirement savings goal. Monthly premiums account for a significant portion of healthcare spending in retirement.³ To see current premiums, visit Medicare.gov.
3. Earmark a portion of your savings for out-of-pocket costs. This includes everything outside of premiums, like deductibles and non-covered care. These less-predictable expenses can account for 20% or more of health-care spending for retirees.³ Having money reserved to cover them can give you peace of mind.
4. Take advantage of a Health Savings Account (HSA) if your employer offers one. Money you set aside in an HSA can be used for qualified medical expenses tax-free both now and after you retire. In 2023, annual contribution limits (including employer contributions) are $3,850 for yourself and $7,750 for a family. If you’re 55 or older, you can make additional $1,000 catch-up contributions each year.
5. Take care of yourself. Improving or maintaining your health now could help cut down on medical expenses in the future.

[1] The Nationwide Retirement Institute^® 2022 Health Care Cost in Retirement Survey (Oct. 2022) Microsoft PowerPoint - NFM-21188AO.1 (nationwidefinancial.com)
[2] “A Bit of Good News During the Pandemic: Savings Medicare Beneficiaries Need for Health Expenses Decrease in 2020,” EBRI (May 28, 2020) A Bit of Good News During the Pandemic: Savings Medicare Beneficiaries Need for Health Expenses Decrease in 2020 (ebri.org)
[3] “How much do retirees spend on uncertain health costs?,” Center for Retirement Research at Boston College (August 2022). How Much Do Retirees Spend on Uncertain Health Costs? (bc.edu)