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

6 ways to plan ahead

Planning now can help you prepare for these expenses and make them feel more manageable.

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, let us help you create a plan 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 about 2/3 of healthcare spending across all retirement.3  To see current premiums, visit Medicare.gov.

  3. Earmark part of your savings for out-of-pocket costs. These include everything outside of premiums, like deductibles and non-covered care. Less-predictable, one-time expenses account for about 1/3 of health-care spending,3 so 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. If you won't receive health-care benefits from your previous employer when you retire, consider working in retirement at a job that provides health-care coverage. Even with Medicare, this could help with out-of-pocket costs. (Depending on the employer, health benefits may not be available or may have specific rules and limitations. Also, working may prevent you from drawing a pension if it’s provided by the same employer. Check details first.)

  6. Take care of yourself. Improving or maintaining your health now could help cut down on medical expenses in the future.
- BUT -
Only 1/3 of Americans
feel knowledgeable about how much they'll need to cover health care costs in retirement1.
(35% millennials, 35% Generation Xers, 30% baby boomers+)
Health care is likely to be your second largest expense in retirement, though it’s often overlooked as a planned-for expense.1 Medicare will not cover all your medical expenses, so you will probably need to plan for considerable out-of-pocket costs. Here are some ways to do it:
  • Continue working
  • Delay taking Social Security
  • Work with your financial professional to make sure your withdrawal strategy is appropriate
  • Manage your investments through retirement

Thinking about early retirement?

Medicare becomes available at age 65, but you may want to retire long before then. If so, you may need to consider other options for covering health care costs. You can:
  • Explore – talk with your employer about extending your benefits in retirement
  • Research – If your spouse or domestic partner is not yet retired and you’re eligible for insurance through their employer, you may be able to join their existing health plan
  • Get a part-time job – Some employers offer medical benefits to part-time employees
  • Consider private insurance – although this may be the most expensive option, it may cost less than paying an uninsured rate for services
Get education on demand to go deeper into paying for health care in retirement

[1] The Nationwide Retirement Institute® 2022 Health Care Cost in Retirement Survey (Oct. 2022), https://nationwidefinancial.com/media/pdf/NFM-21188AO.pdf
[2] "A Bit of Good News During the Pandemic: Savings Medicare Beneficiaries Need for Health Expenses Decrease in 2020," EBRI (May 28, 2020), https://www.ebri.org/content/a-bit-of-good-news-during-the-pandemic-savings-medicare-beneficiaries-need-for-health-expenses-decrease-in-2020
[3] "How to pay for healthcare costs in retirement," MarketWatch (April 10, 2021), https://www.marketwatch.com/story/how-to-plan-and-pay-for-healthcare-costs-in-retirement-11617641824