What’s Your Strategy for Health Care Expenses in Retirement?

We believe some retirees make the mistake of believing their medical costs will be fully covered by Medicare after they retire. Studies reveal a different story, and the cumulative numbers may cause concerns for some. For example, a 2015 Retirement Health Care Cost Data Report recently released by HealthView Services found:1

  • A 65-year-old healthy couple retiring this year and covered by Medicare Parts B, D and a supplemental insurance policy will pay $266,589 in premiums over their lifetime.
  • The couple’s total health care outlay, including premiums, dental, vision, co-pays and all out-of-pocket expenses, would be closer to $394,954.
  • For a 55-year-old couple retiring in 10 years, those total lifetime health care costs are expected to increase to $463,849 over the rest of their lifetime.

There are a few things to remember about these types of conclusions. First, they assume both spouses will live to a ripe old age, which doesn’t always happen. Second, they assume an average amount of medical expenses incurred by both spouses during that timeframe. However, if both members of a couple live well into their late 80s, chances are good that one or both of them are in reasonably good health throughout retirement and may experience lower than these averages for health care expenses.

These studies may be conclusive based on the parameters of the research, but our health is just as important as our finances — and, for that matter, as important as our values and lifestyle. So many factors influence our health and longevity that it may be impossible to know how much each person or a couple will need to cover those expenses.

Bear in mind, too, that the average retiree does not have to pay out more than $300,000 at any one time; those expenses are cumulative over 25 to 30 years. To help meet your unknown retirement health care expenses, we believe it’s a good idea to pursue a mix of strategies — including at least one that offers higher income opportunities as you get older.

Depending on your situation, multiple options may be available, from an income annuity that doesn’t start until later in retirement, to a relatively aggressive growth component in your investment portfolio, to an income growth life insurance product that adjusts to capture gains experienced by a linked securities index. We believe it is essential that you work with a financial advisor to help you create strategies utilizing both investment and insurance products that can help meet your long-term retirement goals. Please remember that investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

Remember, those lump sum totals cover up to 30 years, but the goal of the average retiree is to be able to pay for health care expenses on a month-to-month and year-to-year basis. For that, we believe you need reliable monthly income and long-term growth opportunities. We can offer a variety of strategies to help you create a retirement income plan to help pay for health care expenses in retirement.

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1 HealthView Services. 2015. “2015 Retirement Health Care Costs Data Report.” Accessed March 15, 2016.

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Strategic Wealth Designers, LLC is a Registered Investment Advisor in the states of Kentucky and Indiana. Matt Dicken, Dustin Stanley and Jordan Schwartz are Investment Advisory Representatives affiliated with Strategic Wealth Designers, LLC. The advisors may not transact business in states where they are not appropriately registered, excluded or exempted from registration. Individualized responses to persons that involve either the effecting of transaction in securities, or the rendering of personalized investment advice for compensation, will not be made without registration or exemption.

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