You Didn’t Plan for High Healthcare Costs

Healthcare costs in retirement cannot be avoided. Nevertheless, many people underestimate such costs and end up emptying their nest eggs much sooner than planned.

“When I tell clients in their 40s that basic healthcare costs in retirement are currently more than $250,000, they about fall out of their chair,” said Brandon Hayes, a certified financial planner with oXYGen Financial in Atlanta. As a matter of fact, retirees might need to pay even more than that. According to Fidelity Investments, a 65-year-old couple retiring this year will need around $275,000 for medical expenses in retirement.

What To Do

When planning for retirement, you need to factor in a lot of things and healthcare costs are definitely in the top five. Consider the rising health insurance costs and the potential for increased medical needs as you age when you do the math. “Also, don’t overlook small items like prescription co-pays for those who have diabetes and other health issues that require years of medication, which certainly won’t end in retirement,” Hayes said.

Compare medical services and Medicare options to find the best coverage for your needs. It might pay off to spend more on premium Medicare Advantage plan with comprehensive coverage or supplemental Medicare plans to reduce out-of-pocket costs, according to Littell.