Your Health Needs to Be a Top Savings Priority — Here’s Why


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Healthcare is a retirement expense many people underestimate.

Recent projections reveal that a couple aged 65 should prepare to spend $264,0001on healthcare during their retirement. Fortunately, planning ahead can help you cover those costs — without jeopardizing your other retirement goals.

How healthcare costs add up:

  • Healthcare costs increase with age: For example, retirees over age 85 spend 22% more on routine doctor visits than those aged 65-742.
  • Medicare covers a portion of your healthcare needs, which means most retirees must secure additional insurance to cover remaining hospitalization, doctor visits, outpatient services, and prescription drugs. Combined, these premiums could cost around $168 per month, or just over $2,000 annually.3,4
  • At some point, you or a spouse may need help with daily activities such as shopping, cooking, or bathing. The services of an in-home assistant cost on average $20 per hour, while an assisted living residence costs approximately $3,600 a month.5

Covering costs

Simply tapping into your investment accounts to pay for medical expenses isn’t ideal because you could lose out on future growth for those savings. For example, say you take $10,000 from your IRA to pay for a medical emergency at age 70. That same $10,000 might have doubled in value by the time you were 85 had you left it to grow.6

Instead of tapping into your savings, consider these options for covering medical bills:

  • Contribute to a health savings account (HSA). Money you invest through an HSA will grow tax-free until you withdraw it for eligible healthcare expenses. Although you can only contribute to an HSA until you’re age 65, these funds can be used throughout your lifetime.
  • Purchase an annuity. Annuities provide a stream of guaranteed lifetime income payments
    that can be allocated to cover fixed costs, such as insurance premiums or prescription drug plans.
  • Buy a permanent life insurance policy. Some policies, while offering a death benefit, include options that let you access the policy values in the event that you’re diagnosed with a terminal illness or need long-term care.

Talk with your financial advisor about how much to set aside for healthcare costs. Together, you can create a plan you feel confident about that helps you have the retirement you envision.

“Amount of Savings Needed for Health Expenses for People Eligible for Medicare,” EBRI

“Utilization Patterns and Out-of-Pocket Expenses for Different Health Care Services Among American Retirees”, EBRI

Part B Costs,

How Much Does Medicare Part D Cost?

Senior Care Costs

Based on an assumption of a 5% rate of return

All guarantees are subject to the claims-paying ability and financial strength of the issuing insurance company. Each issuing insurance company is solely responsible for its own financial condition and contractual obligations.


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