Paying for healthcare in retirement is no small task. With costs escalating and coverage growing more complex, you can take steps today to help ensure you’re not struggling tomorrow. As your explore your own retirement planning and healthcare costs, here are key facts to keep in mind.
Fact 1: We are living longer.
Today’s retirees are living longer than ever before.1 In 1975, the average life expectancy at birth in the U.S. was 76.6 years old. As of 2015, the average life expectancy increased to 85.6 years old.2
When you break this data up by gender for today’s expectations:
- American women who turn 65 this year have a life expectancy of 86.6 years.3
- American men who turn 65 this year have a life expectancy of 84.3 years.4
As a result, the longer you live, the more years you have to account for in your financial preparations. You can check your personal life expectancy by using the Social Security Administration’s online calculator.
Fact 2: Healthcare could cost you up to $400,000.
Healthcare will be one of the most expensive responsibilities you have once you retire.5 To prepare for retirement, you have to face reality: As your health declines, your costs will rise.6
Here’s an example breakdown of the costs you can anticipate:
- Medical expenses: $260,000
These costs include increasing prescription drug prices and higher medical care costs.7 - Long-Term-Care (LTC) coverage: $130,000
Retirees usually receive diagnoses later in life for three common ailments: stroke, Alzheimer's disease, and cancer. 8 - Other miscellaneous costs: amount depends on your insurance and Medicare coverage
These include ongoing costs for items such as vision and dental care, co-pays, and any out of pocket costs (not adjusted for inflation). 9
Fact 3: Medicare Part A and Part B won’t cover all your costs.
Retirees who receive Medicare will not see all their extraneous costs covered. In fact, Medicare Parts A and B do not cover healthcare costs such as: 10
- Eye exams
- Hearing aids
- Most dental care
- Routine foot care
As a result, making sure you have adequate coverage and income to cover supplemental expenses will help you prepare for any gaps. You can calculate your potential personal healthcare costs in retirement by using the AARP Health Care Costs Calculator.
Ultimately, your specific retirement goals, health, savings, and other unique details will determine any additional funds you may need to cover your healthcare costs. If you’d like to explore your planning needs against your current financial standing — and how life insurance and annuities could further help meet your goals — we’re happy to help.
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