Created: November 19, 2020
Modified: September 16, 2022

Episode 26: What Is Health Care Going to Cost Me in Retirement?

Thank you for joining us for Episode 26 of our Money Wisdom Question Series, where we answer common financial and retirement investment questions. Today’s question is, “What is health care going to cost me in retirement?”

Health Care Statistics

There are all kinds of statistics out there. Unfortunately, sometimes people on the internet, TV stations or media outlets try to get extra attention by using startling or crisis-oriented numbers in their statistics.

There’s one statistic that says you need to have $250,000 saved for things that Medicare or Medicare supplements will not cover in retirement. Now, some people hear that number and get very overwhelmed. I’ve heard people say they’ve barely saved enough for retirement and they feel secure about it. Then they read these statistics, which makes them feel bad about their situation.

The first thing I would say is, retirement isn’t always perfect. Not everybody can walk into retirement with an ideal financial situation. I like to tell people to deal with it one step at a time. If $250,000 seems very large (if that number is accurate, I’m not sure) then let’s take it one bite at a time. Maybe you have enough insurance to cover the need, but if you don’t then you might have to just live with accepting some risk in retirement.

Medicare

Most people once they reach age 65, they’ve enrolled in the Medicare program automatically. It’s part of what we pay into when we do our payroll deduction, which also includes Social Security. Medicare covers most of the big insurance needs with a deductible. Then, most people buy what’s called a Medicare Supplement Policy or a Medicare Advantage Policy. There are some premiums involved. The higher your income, the higher the premiums, so what you pay stays reasonable and quite equitable. I think for both my mom and dad, they pay maybe $250 a month to be covered with a Medicare Supplement Policy, which is pretty reasonable.

Again, it’s not going to cover everything. It doesn’t cover long-term care. That’s the big hole that most people have is that long-term care issue.

Work Health Care Costs into Your Budget

For me to tell you exactly what it’s going to cost for health care or to buy health insurance in retirement, is almost impossible. What I would say to you is it needs to be worked into your monthly budget. Let’s say you want an income of $5,000 a month. I would include an additional few hundred dollars per month to cover any kind of Medicare supplement type of policy. For most people, this should be adequate.

Talk with a Professional About Other Options

If you do retire before age 65, you should have a conversation with a financial advisor because there are some other options available there. That’s a little bit more of a critical period. Once you reach age 65, you can enroll in Medicare. Before you’re age 65, right now, under current law, you can’t do that. You might need to buy supplemental insurance or go into the insurance exchange that was created under the Affordable Care Act.

Thanks for joining me and I hope you found this information helpful!

P.S. If you enjoyed this topic and want to learn more, download our offer, “Don’t Let Health Care Expenses Derail Your Retirement“.

P.P.S. Feel free to submit questions here for a chance to have them answered!

  • Sandy and Thomas C.
    Sandy & Thomas C. are clients of Johnson Brunetti and received no compensation for their statement.

    “We always felt our financial needs were in very capable hands. Alex Angst is great to work with. Our advisor always made us feel he had our best interests at heart and explained things so we could understand them.”

  • Robert G.
    Robert G. is a client of Johnson Brunetti and received no compensation for his statement.

    “We’ve been clients of Johnson-Brunetti for > 10 years. We’re enjoying a comfortable retirement as a result. Many thanks to Joel and our CFP, Eric Hogarth. I wish we had plugged into this decade approach back when we were in our 30s.”

  • Lisa D.
    Lisa D. is a client of Johnson Brunetti and received no compensation for her statement.

    “Working with Johnson Brunetti has had a positive impact on my life by providing me with the knowledge, confidence, and peace of mind to move forward with my retirement plans. The process of getting to this point, through their guidance, has been informative and pleasurable.”

  • Ken D.
    Ken D. is a client of Johnson Brunetti and received no compensation for his statement.

    “I view your company as one that puts my interests first. I think that is very uncommon and very refreshing. “

  • Jeanne P.
    Jeanne P. is a client of Johnson Brunetti and received no compensation for her statement.

    “Matt does an awesome job! So easy to understand and he listens to our concerns and addresses them! happy I chose your firm!”

  • Anonymous
    This testimonial was provided by a client of Johnson Brunetti and received no compensation for their statement.

    “I have been pleased with the help and service I have received from the company. I have met several team members on Eric’s team and have found all of them very well prepared to meet with me when reviewing my portfolio. I always feel that I am an important customer and appreciate that very much. I hope the firm continues to focus on the customer and maintains its great service. I think you do a great job for someone like me!!!! I’m happy I chose your firm!”

    Johnson Brunetti
    Welcome to Our New Website!
    Everything was designed with you in mind, making our retirement planning resources more easily accessible to you.
    Check out your new resource center, where everything can be organized by article type or topic
    Are you ready to speak with a financial advisor?
    Johnson Brunetti

    Investment Advisory Services offered through JB Capital, LLC.
    Insurance Products offered through JN Financial, LLC.
    Atlanta • Boston • Hartford | Tel: 800-208-7233

    JB Capital LLC is a federally registered investment adviser under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply any level of skill or training. Information presented is for educational purposes only and is not intended as an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.

    JB Capital's Form ADV | Disclaimer | Privacy Notice | Client Relationship Summary

    *Information about our Affiliation with the UConn Huskies

    Johnson Brunetti is a sponsor of WFSB Better Money, WCVB Better Money Boston, WSB-TV Better Money Atlanta, WTNH Money Wisdom, and WTIC Money Wisdom.