If you're like most people, it's likely that health care is going to be one, if not the largest expense you'll face in retirement. While the numbers can be daunting, having a solid plan can help reduce some of the stress they can create. Here are just a few things to consider about the financial side of health care.
Prepare for long-term care
The need for long-term care is more common than you might imagine. In fact, 70% of US adults aged 65 years and older will require long-term care at some point in their lives, with an average stay of 3 years.1
Plan for rising costs
Health care costs have historically been one of the fastest-growing expenses faced by retirees. Since 2000, they've risen by 110%,2 far greater than the rate of inflation. According to industry experts, that rate of increase has shown no sign of slowing.
Save for rising costs
How much will you spend on health care overall? The average couple retiring in 2023 at age 65 may need to have saved $315,000 in today's dollars (after tax) to cover their health care expenses in retirement.3 And that doesn’t even factor in the potential cost of long-term care. What’s more, these costs are the #1 cause of bankruptcy for retirees.4
Annual national long-term care median costs5 (2023)
$68,640
In-home care homemaker
$75,504
In-home health aide
$64,200
Assisted living facility
$116,796
Private room nursing home
Given that the already high costs of health care are expected to continue rising, the importance of building a comprehensive, well thought out approach has never been greater. We can provide the guidance you need to feel more prepared.
Integrate Medicare into your planning
Medicare is likely to be an important part of your plan and if used properly can help ensure medical costs don't create a strain on your retirement. However, it can be difficult to navigate. We may be able to offer consulting services to help guide you through the intricacies of the program, showing you how to integrate it into your comprehensive approach.
Discover the potential of HSAs
If you're looking ways to cover both current and future health care costs in a tax-efficient manner, we can help you understand the 3 major tax advantages of health savings accounts (HSAs)—tax-free contributions, tax-free growth potential, and tax-free withdrawals for qualified medical expenses.7 Whether you’re saving for, transitioning into, or living in retirement, we can help you navigate the benefits of HSAs.
Conversations can help prevent conflict
When it comes to your health care, we believe that transparency among family members is critical. We can help facilitate these vital conversations on topics like long-term care, how medical expenses could impact your retirement age, and how medical costs could potentially impact your estate.
What comes next on your journey to feel more prepared for retirement is a conversation with your advisor. Here are just a few of topics we can work through:
What's driving your expected retirement date? Your concerns about health care or your actual retirement plan?
Have you considered how much you may need for medical expenses in retirement? And have you factored in your own health and family history? Also, have you considered your state of residence? The Cost of Care Survey can help provide a starting point.
How could a health savings account fit into your overall plan and tax situation?
Does your insurance coverage make sense for you? Does it have provisions to alleviate the financial costs of long-term care?
Are you prepared to take full advantage of everything Medicare has to offer? Could you use a guide to help you navigate it?
I'm here to help. Call me and we can discuss any or all of these in more detail.
Additional resources
Insights and perspectives
Learn more about what both Fidelity and outside professionals are saying about navigating the potential costs of health care in retirement.
Planning tools
Even if you're working with a Fidelity advisor,6 there may be some aspects of planning for the costs of health care you want to explore on your own. Our suite of tools and calculators can help you find ways to potentially complement the planning you and your Fidelity advisor do together.
Covering the gap to Medicare
If you're retiring before you're eligible for Medicare at age 65, you'll want to know where to find health insurance coverage.
View tool
Additional Medicare coverage
While Medicare parts A and B will generally cover a majority of your health care costs, you'll need to look to other parts of Medicare to cover your remaining costs. We can provide some possibilities to consider as you review your options.
View tool
Health care before Medicare
If you plan to retire prior to age 65, this tool can help you understand your coverage options for "bridging" the gap before you're eligible to receive benefits.
View tool
Learn more
To learn more about how Fidelity can help you manage the costs of health care, take a moment to see the types of resources we offer, and all the ways we can work together.
