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In Retirement & References

Health Care Costs in Retirement


After housing and possibly transportation costs, health care is expected to be one of your largest expenses in retirement. Unlike our parents’ generation, most of us won’t have access to employer- or union-sponsored retiree health benefits. So, health care costs will likely consume a larger portion of your retirement budget—and you need to plan for that.

A healthy 55-year-old woman on average will pay $79,000 more for health care over her retirement than a 55year-old man, according to a report released by HealthView Services

“Health care is creating a ‘retirement cost gap’ for many pre-retirees,” says Lee Belniak, vice president in Fidelity Workplace Investing. “Although many assume their savings will cover all of their expenses in retirement, health care costs are often higher than anticipated. Many people assume Medicare will cover everything, but it doesn’t. The average 65+ retiree today should expect to pay around $5,000 a year on health care premiums and out-of-pocket expenses, and should carefully weigh all options.”


The drivers behind this mounting retirement health care cost challenge are clear:
    • People are living longer—particularly women. A healthy 65-year-old woman alive today has a 25% chance of living to age 96, versus age 93 for a man.
    • Health care inflation continues to soar: 5.5% annually vs. 1% general inflation over the past year.
    • Although many Americans expect to work longer, the average retirement age is 62.4 Medicare does not begin for most until age 65.
    • While women are living longer than men, their savings are often lower. Men ages 65 to 69 have average retirement account balances of $191,000; women only about $117,000.

Where you retire matters; there can be big regional variations in health care cost and quality. For example, the cost of knee arthroscopy with ACL surgery for a retiree in New Hampshire is approximately one-third higher than the national average of $14,257.

After using the healthcare calculators and determining the kind of health care you will need in retirement it will be clear that saving for retirement should start now. With half of American women projected to live to until about 90, and 25% of us living close to 100, our longevity means that we will likely live our last years alone. Healthcare inflation and increasing medical needs means we will face more years of health care expenses than men and greater costs for each additional year of life.


Here is an interesting example on how approximately 98% of Social Security income will be consumed by retirement health care expenses.


Age/Life Expectancy: 55/89

SS Claiming Age: 67 (Full Retirement Age)

Primary Insurance Amount: $1,096

Total Benefits: $532,926

Total HCC: $522,827

Difference: $10,009

A 55-year old female living to age 89 will see approximately 98% of her cumulative gross SS income consumed by retirement health care expenses.


Did You Know

Half of adults age 50 and over have not discussed retirement health care costs with their spouse.

Married Women and Retirement Healthcare Costs

All too often, before a surviving spouse is facing life on her own, the couple may deplete family savings to pay for the husband’s end-of-life care. After his death, she will now be singularly responsible for all essential expenses, including her own medical and long-term care, with only the remaining savings and Social Security survivor benefits (or possibly a pension and/or home equity that can be converted into an income stream).

How much will that cost? A 55 year old woman who is two years younger and projected to live two years longer than her husband will be responsible for $146,471 in health care expenses (an average of $36,618 per year) over her final four years – certainly a sizable end-of-life expenses for someone living on a fixed budget.

Source Healthview 2017


To Recap

    • Start saving for retirement now.
    • Review and be conscious of the health expense you have today.
    • Medical expenses will be a major expense as women age in retirement.
    • Married women need their own plan as they will spend some retirement years alone.
    • Inform yourself about Medicare and how it will help support your medical expenses.
    • Take good care of yourself now! Some medical conditions and expenses are unavoidable, but many lifestyle-related health issues can be mitigated by caring for your health now. This has implications for your finances as well as your health / quality of life.



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