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

Published: November 19, 2020 | Updated on: November 16, 2020

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.


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“.

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