How to Manage Unpredictable Retirement Healthcare Expenses

A recent report from Ameriprise showed that the number one fear for people in the age group of 50 to 79 is managing the costs of healthcare.

For people in their 30s and 40s, who are decades away from retirement, it’s still the second-most important concern.

Here are a few proven strategies that could help you manage your health expenses more effectively:

Contribute to an HSA

If your health plan has a high deductible, you could be eligible to contribute to a health savings account (HSA). An HSA gives you a tax-advantaged way to save money that you can use to pay current as well as future out-of-pocket health expenses, even in retirement.

Investing pre-tax dollars in this account will let the money grow on a tax-deferred basis. Any withdrawals you make to pay for qualifying healthcare expenses will be tax-free.

Carry disability insurance

Only 72% American workers have long-term disability insurance. In the unforeseen event of a serious illness or injury, one which keeps you away from work for a long time, not having this coverage could result in a major financial setback.

Many employers provide insurance that covers a part of the employee’s income, but it is prudent to buy additional disability insurance in order to cover more of your income.

Plan for Medicare

Retirees are often surprised to know that Medicare will not cover all their necessary medical expenses, including deductibles, co-pays, prescription glasses and dental care. If long-term care is the only care you need, Medicare will not cover it.

If you anticipate certain healthcare expenses that Medicare will not cover, consider buying supplemental health insurance. If you plan to retire before you are eligible for Medicare, obtain insurance to cover the gap.

Consider long-term care insurance

Three out of four Americans don’t have long-term care insurance. With more people living into their late 80s, 90s or longer, the chances of requiring long-term care services are increasing.

Long-term care coverage is less expensive when you purchase it at a younger age. Policies cover a variety of care needs. Evaluate your options with your healthcare provider and a financial professional to make the right choice.

Find housing

As your retirement gets closer, it is time to start thinking about a housing arrangement that fits your changing needs. You might require a new home that accommodates certain physical limitations you could face in the future.

In addition, you could consider remodeling your present home to ensure it is more accessible for someone who made need extra help getting around and getting into the bathtub or shower.

Either option will require advanced financial planning to help you cover the expenditure associated with these changes.


Money cannot buy health (it can help a little though), but it can definitely help you receive the required care you will probably need in retirement. Make more ambitious retirement saving goals in your younger years, and start working toward those goals.

Remember that healthcare debt is one of the foremost causes of bankruptcy in the United States. Creating an adequate margin of safety in financial terms will give you the peace of mind to enjoy your retirement years in the best possible way.