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Planning for Healthcare in Retirement

By Kimberly Jobson

With longer life spans, the elimination of corporate retiree health plans and rising medical costs, healthcare has become the biggest expense for many retirees. For a couple retiring at age 65 in 2017, the expected total cost is estimated to reach $275,000 over the course of retirement- not including supplemental insurance, prescription plans, vision and dental expenses or long-term care costs. These high prices make it essential to account for healthcare costs when planning for retirement, so you can avoid jeopardizing your financial security. Pre-retirees should familiarize themselves with healthcare options and costs and consult their trusted advisor to assist in preparing for these expenes in retirement. 

Here is a breakdown of various options to consider when planning for healthcare costs in retirement:

Coverage options: If you plan to retire prior to age 65, you will need to evaluate your options to obtain coverage until you're eligible for Medicare. Retirees who will have coverage through their employer-sponsored plan should evaluate what is covered under the plan, how much the company pays and the expected out-of-pocket expenses you will be responsible for. If you are not eligible for employer-based healthcare, you will need to obtain private coverage through the Healthcare Marketplace. Since retirement is considered a life event, you will be able to purchase coverage without penalties, should you lose coverage outside of open enrollment. 

Medicare: If you are age 65 or older and qualify for Social Security, you are eligible for Medicare, government-sponsored health insurance. There are four parts to Medicare, including Part A - hospital insurance, Part B - medical insurance, Part C -supplemental insurance plans and Part D - prescription plans. Part B monthly insurance premiums are dependent upon income and cost an average of $130 per month. However, Medicare is not designed to cover all of your medical expenses in retirement, so you will need to obtain additional coverage to account for the expenses not covered by the program. For more detailed information on additional specific costs visit

Long-term care: Because long-term care services are not covered by traditional health insurance plans, factoring in these prolonged costs has become an important aspect of retirement planning. There are many areas to consider when weighing your options and potential need for long-term care, but it may be helpful to start by evaluating your genetics and ability to self-insure. Given the numerous variables and complexity, it is wise to work with an advisor to determine what long-term care option (if any) is best for you.  It's a conversation we often have with our clients, and discussing unique strategies to meet overarching needs. For example, if we determine there may be a need for long-term care, but paying for it out of pocket is not an option, we will look at different policies and their covered services to find an option that is affordable and lends to the success of your financial plan.  

These factors are just a starting point for thinking about healthcare in retirement. Given the complexity of healthcare options and the enormous impact the associated costs can have on your financial security, working with an advisor to ensure you are prepared is more important than ever.