Posted in Triplett & Carothers on July 1, 2025

Many people believe that their medical expenses in retirement will be fully covered by Medicare; however, that is not how Medicare works for most people. Individuals are still responsible for premiums, deductibles, coinsurance and copays. Additionally, Medicare does not cover routine vision, hearing and dental care; health care while traveling outside the U.S.; private-duty nursing; long-term care; and over-the-counter medications. If you don’t have a Part D policy, prescription drugs also will not be covered.

As you plan your retirement budget, you’ll need to account for those costs. Consider your age, your current health, your family’s health history and where you’ll retire — medical costs vary by locality. Also factor in your marital status, as marriage has been correlated to health and greater longevity. Similarly, people who work past age 65 have better health and live longer. Estimate how much you may need to put aside for future health care costs and develop a plan to get you there.

Fidelity estimates that the average couple will need $315,000 in retirement to cover medical expenses, excluding long-term care. Another way to look at this is that health care costs are likely to be 15% of your overall retirement spending. Among retirees who’ve factored the cost of care into their wealth plans, half feel as though they’ve underestimated the expense.

Among the reasons for frequent underestimation is that people are living longer (which is good news!) and so are likely to need more advanced treatments. Longevity and advances in technology have driven procedures such as joint replacement and cataract surgery, which increase quality of life but carry significant costs. Chronic medical conditions — including hypertension, high cholesterol, arthritis, heart disease, kidney disease, dementia and cancer — are often treatable but only with expensive medications.

Covering medical expenses

Because Medicare only covers certain expenses, you’ll have to find ways to fill the gap. If you were able to enroll in a health savings account while you were employed, the money you have saved can be used to pay for certain medical premiums — including Medicare premiums and long-term insurance premiums — as well as preventive screenings such as annual physicals and mammograms.

Other techniques to employ include:

• Taking advantage of company-provided benefit packages for as long as you can.
• Purchasing a Medicare Supplement Insurance Policy, also known as Medigap, to help cover out-of-pocket costs.
• Buying disability and/or long-term care insurance.

Health care costs have grown faster than inflation, which increases the risk that medical costs may diminish your savings more quickly than you had planned. You may need to adjust your plans more than once as your health circumstances change, shifting your priorities and objectives. The health care landscape may also change. Even though it is hard, it is critical to remain flexible on health care costs, which is one of the most important aspects of retirement planning.

Reach out to Roz Carothers and her team at Triplett & Carothers to learn more.

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