Health and Your Retirement

March 2, 2015

doctor-and-patientWhen it comes to retirement, money is the number one concern for most people. Pretty much everyone is worried about whether their savings will support them after they stop working—it's the top financial worry for nearly 60% of Americans, according to a recent Gallup poll.

Of course, having a secure, enjoyable retirement isn't just about having a healthy portfolio. It's also about having a healthy life. And with average retiree health care costs estimated to be as high as $220,000 for a 65-year-old couple today (according to research by Fidelity), you need to start thinking today about your health and medical care in retirement.

Estimating Your Health Costs in Retirement

While surveys such as Fidelity's can give you an idea of how much you might expect to pay for health care in retirement, those aren't numbers that you can really rely on when it comes to your personal planning. That's because your family history, current health and other factors all have an effect on what you may have to spend on health care after you stop working. People with serious health problems could end up spending hundreds of thousands of dollars on care, while other people may be fortunate enough to spend far less.

Questions to ask yourself as you try to get a handle on how much you might need to spend on health care in retirement include:

  • Do I have any chronic health issues (for example, diabetes, high blood pressure or high cholesterol)?
  • How long did my parents live?
  • Did my parents or other close relatives have chronic health issues as they got older? (For example, is there a family history of dementia or certain types of cancer?)
  • Have I researched the cost of Medicare and any supplemental insurance policies I might need?
  • Will my family be able to provide support if I need it, or will I have to pay out of pocket for caregiving?
  • Do I know the average cost of care where I live?

Ways to Manage Retiree Medical Expenses

Fortunately, you do have several options for managing retirement health care costs:

  • Stay fit and healthy. Getting enough exercise and eating right can help you stay healthy and give you the freedom and energy to really enjoy your retirement while also keeping medical expenses down. Getting regular checkups and proactively addressing health concerns can also help you live well in retirement.
  • Take advantage of an HSA. If you're not yet retired, you may want to consider choosing a high-deductible health plan and contributing to a health savings account (HSA). Money you save in an HSA can be used tax-free for health care costs. If you end up not needing the money for health-related expenses, you can withdraw it from the account after you retire without penalty and just pay normal tax.
  • Know that Medicare may not be your only insurance option. If you retire before you're eligible for Medicare, you may be able to get coverage through COBRA or the health insurance exchanges. Some retirees may be able to get insurance through their former employers. Veterans may be able to get coverage through the VA. If you continue to work full time after age 65, you should be able to continue coverage under your employer's group policy.
  • Look into Medigap coverage. These supplemental policies (sold by private insurers) will help you pay for medical expenses that Medicare won't cover, such as deductibles and copays.
  • Have a plan to pay for long-term care. If you anticipate that you might need long-term care in the future, you need a plan to pay for it. Long-term-care insurance, self-insuring (in essence, saving enough to pay for long-term care out of pocket), or certain types of policies that combine life insurance with long-term care could be options.

Living well in retirement is about more than having a nest egg that allows for plenty of travel and golf. It also means having a plan for paying for health care costs and for staying healthy so that you can enjoy the retirement you've worked so hard to earn.