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Its open enrollment time for Medicare and healthcare plans and one truth is evident: the cost of healthcare coverage is increasing. And that trend is not expected to change! For many, the cost of healthcare may be hindering your retirement planning including when you will be able to retire!

The combination of rising health care costs and longer life expectancy means it is essential to include healthcare costs in your retirement planning conversations with your  financial advisor. Healthcare costs are the hidden or forgotten expense in retirement. Recent research completed by HealthView offers a grim picture:

  • The average lifetime health care premium costs for the average 65 year old couple including Medicare part B and D and supplemental insurance is over $266,000.
  • This does NOT include dental, vision, co-pays and out of pocket expenses. Add these in and the figure goes to over $394,000.
  • Additionally this does NOT cover long term care insurance such as nursing home expenses.
  • A 55 year old couple today that plans to retire in 10 years can expect that $266,000 to increase to over $463,000!

But you can and should prepare and plan for these expenses in retirement. One of the best ways to do this is by taking full advantage of a health savings account (HSA) and the sooner the better!

To qualify for a health savings account you must be enrolled in a high deductible health plan (HDHP) either through your employer, an individual health plan or a government health plan. A HSA account is a highly tax advantaged savings account that helps mitigate the risk of a high deductible plan. Its tax advantages are 3 fold:

  1. Money goes in pre-tax (so the money you deposit reduces your taxable income).
  2. Money grows tax free.
  3. When money is withdrawn, for qualified medical expenses, it is tax free.

So a HSA is like an IRA for your future healthcare expenses. Additionally there are no income limitations on who can have this type of account (unlike a Roth) and the money you do not spend this year in the account remains in your account (unlike a flexible savings account which requires you to use the money each year or you lose it.)

Another benefit of a HSA is, once you are over 65, the money can be withdrawn for something other than qualified medical expense without penalty but you will pay ordinary income tax on it.

Fully funding this account through to retirement will help significantly in paying for healthcare expenses in retirement. It may not cover all of them but it will take a bite out of them.

To learn more about how to  plan for retirement including healthcare expenses in retirement, please  contact me to set up a time to meet.




By Debbie Craig, CFP®, MBA, CRPS®

Branch Manager


Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.




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