Education Update: Are You Prepared for Retirement Health-Care Costs?

April 11, 2018

Paying for health care in retirement is not an easy task. Despite rising costs and increasingly complex coverage requirements, you can take steps today to help ensure you’re not struggling tomorrow. As you explore your own retirement planning and health-care expenses, here are some facts to keep in mind: 

Fact 1: We Are Living Longer

Today’s retirees are living longer than ever.[i] In 1975, average life expectancy at birth in the United States was 76.6 years old.[ii] Average life expectancy today is 78.8 years old.[iii]

The longer you live, the more planning you’ll have to do to maintain a prosperous retirement.

Fact 2: Health Care Could Cost You Up to $400,000

Health care will be one of the most expensive responsibilities you have once you retire.[iv]

To prepare for retirement, you have to face reality: As your health declines, your costs will rise.[v]

Here’s an example of a cost breakdown:

  • Medical expenses: $260,000

These costs include increasing prescription drug prices and higher medical care costs.[vi]

  • Long-Term Care (LTC) coverage: $138,000

Retirees usually receive diagnoses later in life for three common ailments: stroke, Alzheimer's disease, and cancer.[vii]

  • Other miscellaneous costs depend on your insurance and Medicare coverage

These include ongoing costs for items such as vision and dental care, co-pays, and any out-of-pocket expenses (not adjusted for inflation).[viii]

Fact 3: Medicare Part A and Part B Won’t Cover All Your Costs

Retirees who receive Medicare will not see all their extra costs covered. In fact, Medicare Parts A and B do not cover these health-care costs:[ix]

  • Eye exams
  • Hearing aids
  • Most dental care
  • Routine foot care

Making sure you have adequate insurance and income to cover supplemental expenses will help you prepare for any gaps. Calculate your potential retirement health-care costs at AARP Health Care Costs Calculator.

Ultimately, your specific retirement goals, health, savings, and other unique details will determine any additional funds you may need to cover your health-care costs. If you’d like to explore your planning needs against your current financial standing, and learn how life insurance and annuities could further help meet your goals, we’re happy to help.