Planning to Retire? Don’t Forget About Your Medical Care Costs!

Senior woman meeting with her financial manager

Planning for medical expenses is an important part of overall retirement planning. It can be difficult to know how much of your retirement savings you’ll need for health care costs as you age — especially if you’re in good health now. 

A study by Fidelity Investments found that a couple retiring at 65 in 2022 would need $315,000 to cover medical costs in retirement. 

Luckily, you can take steps to ensure you have enough saved to do what you want in retirement and cover your health care costs.

Download the retirement planning checklist
This handy checklist prepares you for all aspects of retirement by keeping your financial, medical, and lifestyle to-dos on your radar, so you can retire smart and avoid unwanted surprises later on.

Download Retirement Checklist  

Learn about your Medicare options
When you turn 65, you’re eligible to receive health insurance through Original Medicare (Part A and Part B), which is provided by the Federal government. You can also add additional coverage (Part C and Part D), provided by private health insurance companies.

Here are the four parts of Medicare and what they cover:

  • Part A – Hospital coverage
  • Part B – Medical coverage
  • Part C – Also known as Medicare Advantage plans, which provide additional coverage not included in Parts A and B, and often include Part D
  • Part D – Prescription drug coverage

Why add Part C and Part D coverage?
Many people discover that relying on Original Medicare (Part A and Part B) doesn’t provide enough coverage — and the expenses can add up and cost more over time. That’s because Original Medicare:

  • Covers only about 80% of medical costs
  • Has no limit for medical costs in a year
  • Does not have fixed costs for large expenses (such as a hospital stay)

Your Options
It may seem like you have many decisions ahead of you, but when it comes to Medicare, you only have 3 main options. You can:

  1. Enroll in Original Medicare —  Which includes only hospital (Part A) and medical (Part B) insurance. 
  2. Enroll in a Medicare Advantage plan (Part C) — Which includes benefits not covered by Original Medicare, and may also include prescription drug coverage (Part D).
  3. Enroll in a Medicare Supplement plan — Which includes benefits not covered by Original Medicare, but does not include prescription drug coverage (Part D). These plans generally have higher monthly premiums than Medicare Advantage plans.

Which option will save you the most in retirement?
While every situation is different, many people choose a Medicare Advantage plan as a cost-effective way to cover health care expenses during retirement. A Medicare Advantage plan:

  • Covers everything Original Medicare covers, plus offers additional benefits, such as dental, vision exams, hearing exams, and coverage while traveling
  • Is available with prescription drug coverage (Part D), so you can get all your coverage in one plan
  • Generally has a lower monthly premium than a Medicare Supplement plan — sometimes as low as $0 a month
  • Offers out-of-pocket cost protection by limiting the amount you pay in one year for medical expenses

Adding a Medical Advantage plan to your Original Medicare coverage ensures you have comprehensive health coverage that protects against unexpected health care costs if you become ill or require hospitalization — all at an affordable premium.

Speak with a local Medicare Expert
Just as a financial advisor can help you plan for retirement, a Medicare Expert can help you plan for your health care expenses. Our local, knowledgeable team understands how Medicare plans work and can help find the plan that’s right for you and your budget.

To ask your questions and talk through options with a Medicare Expert, call 1-844-455-3305 (TTY: 711).