Planning for Health Care Costs in Retirement
By: Scott Fischer
As retirement approaches, many people imagine spending more time with family, traveling, or enjoying hobbies—but few plan for one of their largest and most unpredictable expenses: health care. According to Fidelity Investments’ 2024 Retiree Health Care Cost Estimate, a 65-year-old retiring this year can expect to spend an average of $165,000 on health care during retirement. That figure is up nearly 5% from last year and continues a steady upward trend. Yet, many Americans underestimate what they’ll need. Fidelity’s research found that most people approaching retirement estimate only about $75,000 in total health care costs—less than half of what they may actually spend.
Why the Gap?
This disconnect between expectation and reality often stems from the complexity of the Medicare system, the wide range of out-of-pocket expenses Medicare doesn’t cover, and the overall unpredictability of personal health needs. In fact, 50% of adults nearing retirement feel overwhelmed or confused when selecting their Medicare coverage.
Smart Steps for a Healthier Financial Future
At Enza Financial, we believe that knowledge is the best antidote to financial uncertainty. That’s why we guide our clients through every aspect of retirement planning—including health care costs. If you’re planning for retirement or already there, consider these key strategies:
- Start early: Building a financial plan that includes health care expenses well before retirement gives you more time to save and prepare.
- Understand your Medicare options: Original Medicare (Parts A & B) doesn’t cover everything. Learn the differences between Medicare Advantage, supplemental plans, and Part D for prescription drugs.
- Consider an HSA: A Health Savings Account (HSA) can offer triple tax advantages if you’re enrolled in a high-deductible health plan—tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses.
- Review your coverage regularly: Your health needs will change over time. Reviewing your Medicare choices annually ensures your plan still meets your needs.
- Plan for what Medicare doesn’t cover: Think dental, vision, hearing aids, and long-term care—expenses many retirees overlook.
You’re Not Alone in This
The idea of planning for tens (or hundreds) of thousands in medical costs can feel overwhelming—but it doesn’t have to be. At Enza Financial, we help individuals and families develop realistic, proactive retirement strategies that factor in rising health care costs and evolving Medicare options.
If you’re approaching retirement or just starting to think about it, now is the time to plan. Let’s talk about how we can help you feel more confident and prepared for the future. Connect with an Enza Financial representative today to start building your retirement health care strategy.
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