Retirement Read Time: 2 min

How will you pay for health care in 2053?

Imagining your retirement can be a challenge, especially if it’s decades away. it’s never too early to start (or continue) planning and saving for retirement, especially when you consider the costs of health care.

Data suggests US workers are worried about their healthcare in retirement. Only 22% of US workers know how they will pay for health care expenses in retirement, but a whopping 84% of US households prioritize saving for health care expenses in retirement.1

Women are particularly hard-hit by health care expenses in retirement, as they tend to live longer than men by an average of six years.2 Plus, they put less priority than men on financial strategizing — a double-hit that can lead to serious financial vulnerability. Only 13% of US women feel confident about paying for health care in retirement.1

How much does health care in retirement cost today?

People routinely underestimate their annual, out-of-pocket health care costs in retirement by half.3 $660,000 in out-of-pocket health care costs is what a healthy 65-year-old couple can expect in 2023.2,4

What will health care cost when you retire?

The price of health care tends to rise over time. With just a modest 2.5% annual inflation rate, the price of retirement health care will more than double by 2053.5

Medicare is neither free nor all-inclusive

While Medicare picks up the lion’s share of medical costs, premiums and deductibles for Medicare part B plans rose steadily from 2012 to 2022, taking their first dip in a decade in 2023.6,7 But it is worth remembering that Medicare is not free, and you may have to pay for many drugs out-of-pocket and buy supplemental insurance for things that Medicare doesn’t fully cover, like vision and dental care.

6 steps to consider now:

  1. Retire later, if possible
    Waiting until age 65 makes you eligible for Medicare; each year you delay, up to age 70, adds 8% to your Social Security benefits8
  2. Save, save, save
    Save money via tax-advantaged instruments like 401(k) and IRA plans. Experts recommend earmarking 5-15% of your savings for future health care expenses.9
  3. Take care of your health
    Healthy lifestyle habits can help you get more out of life, now and during retirement, and make your long-term costs more manageable
  4. Add more guaranteed income
    Sources of guaranteed income, like annuities or whole life insurance, can help you feel more confident about your retirement. 10,11
  5. Start (or expand) your emergency fund
    While it won’t grow as quickly as invested funds, an emergency fund can help you handle unexpected expenses.
  6. Fund your HSA (if available)
    If you have a health savings account (HSA) available through your health insurance, you can use it now to save tax-free for future medical expenses, even in retirement.

Retirement health care costs may seem daunting, but you can plan for them. Remember: it’s never too early (or too late) to start building a strategy for the retirement of your dreams.

Brought to you by The Guardian Network © 2023. The Guardian Life Insurance Company of America®, New York, NY

2023-152672 Exp. 3/2025

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