Life After Retirement: Healthcare Planning

Trent Bradshaw CFP®, AIF® & Brandon Rogers CFP®, AIF® |

Today, something is going on that you might not know about and, worse, might not know how to stop. The situation? Consumers are seeing an erosion of their retirement savings, their buying power, and their quality of retirement life. The culprit? Lack of proper healthcare planning.

Healthcare can be one of your largest expenses during your retirement years, and running short in your savings account is a primary fear for most Americans—even more worrisome than death. According to the Fidelity Retiree Health Care Cost Estimate, an average retired couple age 65 in 2020 may need approximately $295,000 saved (after tax) to cover healthcare expenses in retirement. Add to that, the median cost of long-term care in a private room has reached $109,000 ($142,254 by the year 2030) per year, and falling short of funds becomes a real possibility if you don't have a financial plan.


Let's uncover what expenses to watch out for.

Depending on your plan these potential expenses may or may not be fully covered:

Standard deductibles, inpatient hospitalization, skilled nursing, home health care, a skilled nursing facility, physician services, outpatient hospital visits, some home health care, medical equipment, and prescriptions. When you're budgeting your medical expenses, remember to account for the copays or amounts you pay for prescriptions after the deductible has been applied.

Let's not forget the additional vision & dental care you might need. You need a budget for deductibles, premiums, and out-of-pocket expenses.


So, if we need to preserve our health, where do we preserve our wealth?

According to a 2019 Motley Fool article, to avoid being part of the 40.6% of households facing a retirement deficit, change your saving habits. It's recommended to aim for saving at least 15% of your income, including any employer match available to you, to ensure you have the cash to support yourself during your senior years.

Consider a health savings account (HSA) if you're pre-retiree status or not yet enrolled in Medicare. Advantages include collecting employer contributions, tax-deferred growth, and tax-free withdrawals for qualified medical expenses. Funding a savings program like this now allows time for growth that will pay for medical premiums during retirement and keep more of your retirement savings intact. Individuals 55 or older can make a catch-up contribution of $1,000 per year in addition to the maximum contribution limit of $3,500 for individuals and $7,200 for families.

Long-term care insurance (LTCi) is another option for keeping your wealth and preserving your health. With 14 million adults age 70 needing long-term care service in 2018, LTCi has a solid argument. Working with a financial professional to review several different LTCi companies can save you thousands of dollars and loads of unnecessary worries. Not all policies are the same, but the coverage should include nursing home care, assisted living facilities, adult day care, in-home care, and home modifications.

Another option is a hybrid insurance policy that combines life and long-term care coverage. With a hybrid, you'll still provide a death benefit to beneficiaries once you die, but you also have the security of covering medical costs while you're living. This concept leaves your nest egg available for its intended purpose and eliminates the worry of burdening family to care for you, which could unintentionally deplete their savings. Without proper vision coverage, bills can quickly add up, and often employer-sponsored vision plans can provide retirees with a cost-effective alternative. Regardless of the monthly costs, the returns and benefits of maintaining your vision coverage are eye-opening. What's more, Americans with vision coverage are twice as likely to have an annual eye exam as those who don't.12 That means certain chronic conditions and health problems are twice as likely to be discovered early and cost less to repair.

Consider an annual health/wealth checkup. Shop around annually for better prescription drug plans. Don't settle on a single Part D plan and stick with it. Plan formulas can change, and drugs that were once affordable may triple in cost over the years. Consider the Medicare Advantage Plan. You may find that dental coverage or hearing aids are now much more affordable. Finally, remember to check your own health and never put it at risk. Treating a cough today is cheaper than a hospital stay when it turns to pneumonia. An ounce of prevention goes a long way to creating a quality life after retirement.



  • “How to plan for rising health care costs” Fidelity. [Accessed Aug 3, 2020]
  • “Cost of Care Survey” Genworth. [Accessed March 2021]
  • “How to Plan for Medical Expenses in Retirement” Investopedia. [Accessed Jan 3, 2021]
  • “Advisors fight insurers to pay long-term care benefits” Financial Planning. [Accessed May 8, 2019]
  • “Who Needs Long-Term Care Insurance?” Ramsey. [Accessed Mar 12, 2021]
  • “Retiring Soon? Here’s How to Keep Your Vision Insurance” VSP Individual Vision Plans. [Accessed Mar 16, 2018]