By Key Points
It’s no secret that retirement costs a lot of money. Even if you’re fairly healthy, your home is paid off, and you aren’t planning to travel the world, being alive isn’t cheap. You’ll still have to pay for groceries, utilities, insurance, clothing, and transportation, among other things.
It adds up quickly. Many seniors need $1 million or more to retire comfortably, and they can expect to spend around $185,500 of that on healthcare, according to a recent Fidelity study. Healthcare isn’t usually a cost you can avoid, so take these steps to prepare for these bills and keep them from derailing your budget.
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Why you could pay $185,500 for retirement healthcare costs, even if you have Medicare
Seniors often turn to Medicare to help them with their healthcare bills, but it definitely won’t cover all their costs. You’ll still owe premiums, deductibles, and co-pays, and you’ll pay full price for services not covered by Original Medicare unless you add supplementary insurance policies.
The Fidelity study calculated the out-of-pocket retirement healthcare costs for a 65-year-old retiring in 2026 at $185,500, but this could be an underestimate if you’re decades away from retirement. Inflation will continue to drive up expenses, making it all the more important to have a strategy in place.
Supplement Original Medicare with additional policies
The most important move you can make is to purchase additional insurance to fill in the gaps in Original Medicare. This will bring additional monthly costs, but it can reduce how much you have to pay out of pocket when you need medical care.
You can either opt for a Part D plan for prescription drug coverage and a Medicare supplement plan that pays for other services that Original Medicare leaves out, or you could join a Medicare Advantage plan. These plans are available through private insurers and cover the same benefits as Original Medicare, plus some extras.
If you’re concerned about needing long-term care, you may want to look into long-term care insurance as well. This can be expensive, so shop around and compare your options before settling on a policy.
Beyond that, do your best to stay healthy. Take advantage of free preventive services Medicare offers to catch problems early, before they become more expensive. And don’t forget to shop around for new health insurance policies at least once a year to make sure you’re getting the best possible deal.
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