How To Plan For Healthcare Costs That Could Derail Your Retirement

The Lake Oconee Boomers Team

People work for decades with a hopeful eye toward retirement. But while many try to envision their retirement years as a blissful time of fun and relaxation, no one has a crystal ball showing exactly what all the expenses will look like. This is especially true of health care. Fidelity’s annual Retiree Health Care Cost Estimate projected that a 65-year-old couple retiring in 2019 could expect $285,000 in health care and medical expenses during their retirement.

An Edward Jones survey showed many Americans are concerned about health care expenses in retirement, particularly baby boomers. “People spend their healthy years accumulating all their wealth,” says Michael Macke (, vice president and co-owner of Petros Financial Group. “They work hard and save, building their nest egg. “But when you retire, you wind up spending a lot of your wealth on your health. In talking with people about retirement for 25 years, health care is always their top concern. To most people it’s the great unknown that can derail the best-laid plans. You never know when you’re going to get sick or come down with a disease.  What kind of care will be required, and most of all, what is it going to cost?” 

How do you plan for that great unknown — health care costs in retirement? Macke offers these tips: 

Make extra wiggle room for the “what-if” medical expenses.

When planning a long-term budget, most people just look at their baseline monthly expenses, but it’s wise to have a discussion about how health care costs can fit in during retirement,” Macke says. “Budgeting for a potential additional expense of $350 to $500 per month in the future can help you be better prepared to handle that ‘what-if’ scenario.” 

Open a Health Savings Account (HSA). 

An HSA offers tax advantages such as deductible contributions and tax-free withdrawals for qualified medical expenses. “The funds from your HSA can be used to pay for Medicare premiums and long-term care insurance premiums,” Macke says. “Those who are 55 or older can make a catch-up contribution of $1,000 a year in addition to the maximum contribution limit (which is $3,500 annually for individual coverage and $7,000 for family coverage).” 

Manage Medicare annually.

“Every year, you should be reviewing Medicare plans. You need to figure out which plan is best for you based on your health as well as what’s covered and what isn’t in each option.” Macke says. “Some plans may cost a little more but would save you on doctor’s visits and co-pays. Also, remember that your part B and D premiums could be higher based on your annual income from two years prior. Make sure you are working with a tax planner and retirement planner to manage your income, which may include distributions from retirement accounts. Being aware of these limits could save you money! Your health changes constantly as do your options for Medicare coverage. Make sure you are evaluating each year.” 

Pay attention to your health.

Sounds simple, but a healthy lifestyle is the best way to reduce the chance of health complications and costly bills in retirement. “Don’t miss annual checkups with both your doctor and dentist,” Macke says. “Adhere to a reasonable diet and fitness regimen. And don’t discount the dentist. Cardiovascular disease shows up in the gums first.” “Unexpected medical expenses later in life threaten our physical health and our financial health,” Macke says. “Therefore, it’s vital to be proactive and plan as early as possible in order to protect your retirement you’ve worked so hard for.” 

Michael Macke ( is vice president, owner and principal advisor of Petros Financial Group, Tax & Wealth Advisors. He has been a Certified Financial Planner® practitioner since 2005 and has over 20 years of experience in banking and financial services. Macke believes that the best financial plans are holistic in nature and incorporate all aspects of your financial life, including: investments, insurance, tax planning, Social Security strategies, Medicare and estate planning. Macke is also founder and president of Petros Advisory Services, a registered investment advisor firm.