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Don't Let Healthcare Costs Derail a Healthy Retirement

For many, retirement is a time to enjoy the fruits of one's labor and pursue long-held dreams. However, it is crucial to be prepared for the financial challenges which may arise, particularly concerning healthcare expenses. As people age, their medical needs tend to increase, which requires thoughtful planning to meet these needs in retirement. This article explores the potential costs associated with healthcare in retirement and provides valuable insights on how to start saving now to ensure a financially secure and healthy future.

Understanding Healthcare Expenses in Retirement

It is common knowledge healthcare costs have risen substantially over the past several decades. Factors such as inflation, new medical technologies and longer life expectancies have contributed to the rising cost of healthcare. According to recent studies, the average age-65 retired couple may need as much as $318,000 to cover medical expenses throughout their retirement years.[1] These expenses include insurance premiums, deductibles, co-pays, prescription medicine expenses, long-term care expenses and expenses associated with unforeseen health issues.

Medicare, the federal health insurance program for those aged 65 and older, plays a significant role in covering healthcare expenses in retirement, but it does not cover everything. There are out-of-pocket expenses, such as premiums for Medicare Part B and Part D, as well as copayments and deductibles.

Saving for Healthcare Expenses in Retirement

Planning and saving for healthcare expenses in retirement should be an integral part of every financial plan.  By taking proactive steps early, individuals can minimize the financial strain associated with healthcare costs later in life. Here are some crucial steps to consider:

Evaluate Your Current Health and Insurance Coverage:

Assess your health condition and understand the limitations of your current health insurance coverage. Determine if additional insurance options or supplemental plans may be necessary to bridge any gaps.

Educate Yourself on Medicare:

Gain a thorough understanding of the different parts of Medicare (A, B, C and D) and what they cover. Research the associated costs and deadlines for enrollment to make informed decisions. A good place to start is at Medicare.gov.

Estimate Future Healthcare Costs:

Utilize online tools, retirement calculators and consult with your financial advisor to estimate potential healthcare expenses in retirement. Account for factors like inflation, potential medical conditions and desired coverage.

Start Saving Early:

Time is your greatest asset when it comes to building a retirement healthcare fund, so start saving as early as possible and contribute regularly to a dedicated retirement savings account. Tax-advantaged accounts like a Health Savings Account (HSA) or an Individual Retirement Account (IRA) can provide a great opportunity to save for healthcare expenses in retirement while enjoying potential tax benefits along the way.

Budget and Prioritize Savings:

Make healthcare savings a priority in your budget. Cut unnecessary expenses and redirect those funds towards your retirement HSA.  Consistent contributions over time can make a significant impact.

Stay Healthy:

Prioritize your health by adopting a healthy lifestyle. Regular exercise, a balanced diet and preventive care can help minimize healthcare expenses over the long run.

As retirement approaches, it is essential to consider the potential costs associated with healthcare and take action to secure your financial well-being. By understanding potential expenses, planning ahead and saving early, you can minimize the chances of healthcare costs becoming an undue financial burden later in life. Consult with financial advisors, explore savings options and make informed decisions regarding Medicare and supplemental plans. Remember, the key is to be proactive and take the necessary steps now to ensure a financially stable and healthy future in retirement.

[1] Source: ebri.org. Data as of February 9. 2023. https://www.ebri.org/content/projected-savings-medicare-beneficiaries-need-for-health-expenses-remained-high-in-2022 

US Capital Wealth Advisors, LLC (“USCWA”) is a Texas-based investment advisory firm registered with the United States Securities and Exchange Commission (“SEC”). As an independent, fee-only, registered investment advisor (RIA), USCWA is able to provide sophisticated, holistic wealth management services, with expanded access to investment solutions. We take our fiduciary responsibility to you seriously, which means we are committed to what is in your best interest. Our long-standing objective is to enable you to achieve your financial goals and to act as a trusted resource for you and your family. 
This material is for informational purposes only and is an overview of the capital markets and is intended for educational and illustrative purposes only. It is not designed to cover every aspect of the markets and is not intended to be used as a general guide to investing or as a source of any specific investment recommendation. Readers should conduct their own research before making any investments. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument, investment product or service. In preparing this material we have relied upon data supplied to us by third parties. The information has been compiled from sources believed to be reliable, but no representation or warranty, express or implied, is made by US Capital Wealth Advisors, LLC, as to its accuracy, completeness or correctness. US Capital Wealth Advisors, LLC does not guarantee that the information supplied is accurate, complete, or timely, or make any warranties with regard to the results obtained from its use. Opinions included do not necessarily represent the views of US Capital Wealth Advisors, LLC. Please see USCWA’s ADV Part 2 for more information about USCWA.
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