The Harsh Reality of Healthcare Costs in Retirement

Senior Finance Advisor
6 min readDec 22, 2018

Updated on Dec 21, 2018

Healthcare is one of the largest expenses in retirement today and many Americans are not preparing for the large out-of-pocket expenses that will be a reality in their retirement years. Financial expert Philip Moeller provides tips on what you need to consider and how you can successfully prepare for your financial future.

Many people age forty and beyond realize that retirement today is not that of a generation ago. Gone are the days of company pension, company-paid health care and assured Social Security. Today seniors need to plan more effectively and consider that they’ll need more money to pay the costs of living that used to be covered by work or government programs.

Healthcare is an expense that is not getting enough retirement planning attention. Philip Moeller, author of “Get What’s Yours for Medicare: Maximize Your Coverage, Minimize Your Costs” and the co-author of the updated edition of The New York Times bestseller “How to Get What’s Yours: The Revised Secrets to Maxing Out Your Social Security,” comments:

“I don’t think Americans have ever saved enough for their futures. The problem is that today, the stakes are much larger. Today, many seniors are on their own and don’t really have a cushion in terms of caretaking and financial support. More often than not, the financial flow goes from retirees to adult children. Not only that, but 401k plans have shifted the retirement responsibility solely onto the backs of retirees.”

Moeller discusses that there used to be a 3-legged stool for retirement: Retirement savings, Social Security and a guaranteed pension or annuity from an employer. Today, the third leg is gone, and people have to rely on their own retirement savings strategy which was exacerbated by the 2008 recession for many senior households. People are putting off retirement planning until they are older, and many lower- and middle-class Americans are struggling.

It’s important to be an advocate for your future and think about retirement planning; especially when healthcare costs are much more expensive than many Americans realize.

Healthcare Costs in Retirement Average $280,000 Per Couple

A couple who retired in 2017 can expect to spend an average of $280,000 for health care costs throughout retirement, according to recent data from Fidelity Investments. That figure is likely to increase in 2018 and continue to rise during the following years. Moeller stresses the importance to not be passive about healthcare:

“You are responsible for your health and for paying for your healthcare. Employers are less and less able to fulfill those roles. Historically, people have been passive about healthcare thinking their doctor will take care of them, and that’s not so true today — You need to take ownership. It’s important to not wait until you’re 65 to decide you’re going to get healthy as there is a natural aging process.”

Here are the three key areas to be cognizant of when it comes to being proactive with your healthcare:

1. Your Health

Moeller stresses to pay attention to what you put in your body as developing behaviors that are consistent with good health are hard to develop and will help you be more successful later in life. If you are diligent about taking care of your health by getting enough sleep, eating a healthy, well-balanced diet, managing stress and getting the right social and mental stimulation, you are creating good habits for a healthier life. Moeller discusses that when a person reaches their early 50s, it’s important to have good behaviors that are consistent with good health as part of your daily routine. “I’m a big believer from a physical standpoint to ‘use it or lose it,’” he says.

Moeller is also a big fan of working longer and delaying Social Security. He discusses, “Retirement is not good for your health. Retirement is not for everyone as it takes work to do it right to get the right socialization, stimulation, and routine. In fact, retirement causes a decline in many areas for people, as they are often isolated and no longer have a paycheck.”

2. Your Healthcare

People are traditionally passive with their healthcare which is why it’s so important to be proactive when it comes to managing your healthcare needs, according to Moeller. He thinks it’s important to take an active role to find the hospitals, doctors and care plan that makes the most sense for individual needs. Moeller stresses to pay attention to the quality of your healthcare as being diligent with preventative health will help save money in potential health costs down the road.

3. How You Pay for Healthcare

Employers used to take care of many of the health plans and there was less ‘choice’ for employees. Today, the burden has shifted to you. High-deductible health plans can catch people by surprise and healthcare should be part of retirement planning to help prevent expensive surprises as you age. “As you get closer to retirement,” Moeller discusses, “no later than age 60, you should start to become an expert on your employer health plan and other medical plans available to you, such as Medicare.”

Moeller says it’s important to find the healthcare plan that can save you money. Take advantage of financial healthcare opportunities, such as health savings accounts (HSAs). The rise of high-deductible healthcare plans has made Medicare more attractive as it’s cheaper and more effective than alternatives. The key is to think about this before you retire so that you have a plan. Moeller makes a good point: “Your health is for the future you, not the you today.”

Have a Proactive Healthcare Plan

The reality of the situation is that unless you’re the first person in the history of the world to combat aging, you are going to age and have healthcare needs to address. Natural aging means you have healthcare needs that arise. Moeller feels lucky to be living the aging dream as he has been dedicated to keeping up with his work, health, and family. He has some pretty good advice:

“Get off your ass and work if you want to enjoy your 70s and 80s. It’s important to be prepared physically and financially and the choices you make along the way influence those outcomes.”

You also need to do your best to stay educated on your financial healthcare options. Review health care plans, enlist the help of a professional and keep on top of changing healthcare plans. “My embarrassing story,” Moeller notes, “Is that I almost had to pay an outrageous amount for one of my medications. Medicare Part D dropped the expensive drug from their plan, so as I was looking into 2018 coverage last year, I happened to catch — the day before open enrollment — that I would have had to have paid at least $20,000 a year for this drug. If I hadn’t done my research, I would have had this tremendous out-of-pocket expense.”

Take Moeller’s advice: Plan ahead for healthcare expenses and make sure to include healthcare as part of a comprehensive retirement strategy. If you are diligent with your health, healthcare and financial plan, you’ll be much more prepared for future healthcare costs.

About Philip Moeller

Phil Moeller is the author of “Get What’s Yours for Medicare: Maximize Your Coverage, Minimize Your Costs” and the co-author of the updated edition of The New York Times bestseller “How to Get What’s Yours: The Revised Secrets to Maxing Out Your Social Security,” with Making Sen$e’s Paul Solman and Larry Kotlikoff. On Twitter @PhilMoeller or via e-mail:

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