Retirement Healthcare Budgeting for Seniors Over 65: A Financial Wellness Guide

Whether you are close to retirement or already in it, the financial challenges that come with healthcare expenses are often unanticipated. Many retirees find their budgets strained by the need to pay for Medicare premiums and prescription drugs along with other out-of-pocket medical costs. In addition, long-term care costs may also be on the horizon.

Fortunately, with careful planning, you can manage these added expenses while ensuring that you have enough money to live the rest of your life. In this article, we will take a look at some of the key factors to consider when planning for healthcare expenses in retirement.

The first step is determining your overall health. As you age, your chances of experiencing a medical emergency increase. A medical event that requires inpatient hospitalization can add up to a substantial cost. According to the Fidelity Retiree Healthcare Cost Estimate, a typical 65-year-old couple retiring in 2023 can expect subsequent medical expenses of $315,000. And that number doesn’t include additional costs such as over-the-counter medication, dental care or long term care.

Inflation also plays a role in the total amount you’ll spend on healthcare. Typically, healthcare prices rise faster than the general price of consumer goods and services. A good rule of thumb is to assume a rate of inflation around 5% for your retirement budget, but you may want to use a higher or lower number depending on your personal situation.

Your current health also plays a significant factor in how much you will need to save for retirement healthcare costs. If you are currently on a high deductible health plan, you can proactively reduce future costs by investing in a health savings account (HSA). You can then use the funds in your HSA to cover out-of-pocket healthcare expenses as well as pre-tax Medicare premiums.

If you’re still working, a smart strategy is to sign up for the company wellness program. Besides helping you stay healthy and happy, these programs can also help you qualify for reduced or waived insurance premiums. This can reduce your monthly cost of coverage and potentially give you a better chance of qualifying for a Medicare Advantage plan, which typically offers more comprehensive benefits than Original Medicare.

As you prepare for retirement, it’s also important to consider what other types of unforeseen expenses could pop up. For example, if you have a chronic disease like diabetes or high blood pressure, it’s essential to be proactive in managing your condition and follow your doctor’s advice.

Ultimately, the best way to ensure that you have enough money for all of your retirement Retirement healthcare budgeting for seniors over 65  expenses is to start saving early. The earlier you begin, the more time you have to grow your savings. Remember, it’s also a good idea to diversify your investments so that you can protect against potential declines in the value of certain assets. In addition, consider talking with a trusted financial professional about the strategies available to you for managing your retirement healthcare budget.