Healthcare Is the Retirement Expense Most People Underestimate
Ask someone what they're worried about in retirement and you'll usually hear some version of the same answers.
Running out of money. Market volatility. Inflation.
Those are all legitimate concerns. But there's one expense that consistently catches retirees off guard, and it's one most people significantly underestimate when they're building their plan.
Healthcare.
The Numbers Are Sobering
A 65-year-old couple retiring today can expect to spend, on average, hundreds of thousands of dollars on healthcare costs over the course of their retirement, even with Medicare coverage.
That number surprises almost everyone who hears it.
Because most people assume Medicare covers most things. It doesn't.
Medicare covers a lot. But it comes with premiums, deductibles, copays, and significant gaps, especially around long-term care, dental, vision, and hearing.
And the older you get, the more those costs tend to compound.
The Gap Before Medicare
Here's a challenge that's becoming increasingly common.
Many people want to retire before age 65, when Medicare kicks in.
If you retire at 62, or even 63 or 64, you're on your own for health insurance for several years. And private health insurance for someone in their early 60s is expensive.
Depending on where you live and what coverage you need, premiums alone can run well over a thousand dollars a month per person. Sometimes significantly more.
This is a real obstacle for early retirement that doesn't show up in most financial projections, and it catches people completely off guard.
Long-Term Care: The Expense Nobody Wants to Plan For
There's a specific healthcare cost that deserves its own conversation.
Long-term care.
The likelihood that you'll need some form of long-term care, whether that's in-home assistance, an assisted living facility, or a nursing home, is higher than most people assume. And the cost is substantial.
A private room in a nursing facility can cost well over $100,000 per year. Home health aides, while less expensive, still add up quickly.
Medicare covers very little of this. And Medicaid, which does cover long-term care, requires you to spend down most of your assets first.
Long-term care is one of those expenses that can derail an otherwise solid retirement plan in a way that's very difficult to recover from.
What You Can Actually Do About It
Planning for healthcare in retirement isn't about predicting exactly what you'll spend. Nobody can do that.
It's about building a plan that can absorb what healthcare actually costs, including the unexpected.
A few things that are worth thinking through:
Bridge coverage before Medicare. If you plan to retire before 65, know exactly what your health insurance options are and what they'll cost. This needs to be part of your income plan, not an afterthought.
Medicare isn't one-size-fits-all. There are meaningful decisions to make around Medicare, which parts to enroll in, whether a Medicare Advantage plan or a supplement makes more sense for your situation. These decisions have real financial consequences and are worth getting right.
Long-term care has to be part of the conversation. Whether that means a traditional long-term care policy, a hybrid life insurance product, self-insuring through dedicated assets, or a combination, there are options. But the time to think about them is before you need them, not after.
Build a cushion. Healthcare costs in retirement are not fully predictable. A good plan accounts for that uncertainty rather than assuming the best case.
What We See at The 611 Group
Healthcare is one of the most important, and most often skipped, parts of a retirement income plan.
We help clients think through the full picture. What coverage will look like at different stages of retirement. What long-term care could cost and how to plan for it. How healthcare expenses interact with income, taxes, and withdrawals.
Because a retirement plan that doesn't account for healthcare isn't really a complete plan.
A Final Thought
Healthcare in retirement is not something you want to figure out as you go.
The costs are real, they're significant, and they have a way of showing up at the worst possible time.
If this is an area where your plan feels uncertain, or where you haven't looked closely, it's worth a conversation sooner rather than later.
Willie Schuette
The 611 Group Wealth Advisors
This content was generated utilizing the help of AI research and is intended for informational purposes only. Please consult a qualified professional for personalized advice. Not endorsed by or affiliated with the Center for Medicare and Medicaid Services (CMS) or any other government agency. For specific tax planning advice or services, please consult a qualified tax advisor or CPA.