Planning for health care in retirement

Key Points

  • It’s not uncommon to spend more on health care in retirement as you age.
  • Proactive planning and saving strategies can help safeguard your assets.
  • Your advisor can help you plan for the cost of health care in retirement.

Although you might have more health care needs in retirement as you age, planning ahead can help you cover unexpected medical expenses — and protect your assets.

Here are several options to help you cover medical expenses in retirement.

Medicare Advantage

A supplemental Medicare Advantage plan could help you pay for the health care costs Medicare doesn’t cover, such as routine dental care, eye exams and hearing aids. Because there are many options, it’s a good idea to comparison shop well before you turn 65.

Private, Medicare-approved companies offer Medicare Advantage plans that typically include:

  • Medicare Part A coverage for hospital and hospice care
  • Part B coverage for doctor visits and routine medical care
  • Prescription drug coverage as well as vision and dental insurance

The plans expanded this year to cover additional benefits that could enable you to continue living in your current residence:

  • Telehealth services to connect you with a doctor via phone or videoconference
  • Home modifications like ramps and grab bars
  • Home dialysis

Long-term care insurance

Long-term care insurance can be crucial in helping to protect your retirement assets. About 60% of Americans will need some form of long-term care services in the future,1 and Medicare and Medicare Advantage plans don’t cover them.  

Taking out a long-term care policy when you’re in your 50s could mean lower premiums, as well as a better chance of passing the medical exam most providers require. Newer long-term care policies may offer hybrid life insurance, such as coverage that allows you to pass on unused funds to your heirs. Some companies also offer riders you could add to new permanent life insurance policies for additional fees that allow death benefits to cover long-term care expenses.

Health Savings Accounts

If you have a health savings account (HSA) with a high-deductible health plan through your employer, consider contributing as much as you can. With some limited exceptions that may be offered by an employer,  flexible spending accounts (FSAs) generally require the employee to use the dollars within the calendar year, but you can roll over HSA account balances every year. If you contribute the maximum HSA amount plus the catch-up amount after age 55, your savings can really accumulate over time.

Hypothetical HSA savings over a 10-year period2 

This is for illustrative purposes and is not meant to represent any specific investment or to imply any guaranteed rate of return.

Talk to us

Your advisor can help you save enough for projected medical expenses and assess your needs for long-term care coverage.


Medicare high-income surcharge

If your income is $88,000 or more ($176,000 for couples), you’ll pay more for Part B premiums than the standard $148.50 monthly premium. Premiums are incrementally higher for those with higher incomes, maxing out near $504.90 per month for individuals with incomes of $500,000 or more ($750,000 for couples).3 Your advisor can help you plan for higher premiums as you create your retirement income strategy.