3 Most Outrageous Medical Expenses In Retirement And How To Prepare For Them

August 10, 2023
Medical Expenses
by Kolton Opdahl

Saving money for retirement is extremely valuable, but so is understanding how to manage those finances when entering retirement. Medical expenses in retirement will require a lot of money, and are sometimes unexpected. With this in mind, it is important to be aware of the highest and most common medical expenses so you can be prepared. This list includes: 

  • Insurance premiums
  • Assisted Living
  • Prescription Drugs
  • Dental Costs
  • Vision Costs

Out of this list, there are 3 medical expenses in retirement that tend to be the most costly. Here are some tips on how to plan for your retirement medical costs. 

Insurance Premium

According to a recent study, “health insurance premiums account for between 75% and 82% of retirees’ annual health care expenses” (Banerjee). Generally speaking, insurance premiums will be a predictable expense that will be paid monthly or yearly. You should be able to expect the payment. However, beware of out-of-pocket expenses. Most people qualify for Medicare at age 65. This will cover many expenses such as hospital care, outpatient coverage, and prescription drug coverage. Health insurance premiums for private coverage will be the main financial concern, should you retire before age 65. Make sure you figure out how to pay for those costs until then!

Assisted Living

Housing is another major expense to consider when transitioning into retirement. In fact, the Department of Human Health and Services says that about 70% of individuals over the age of 65 require some form of long-term care services during their lifetime (Breeding, 2016). Staff size, location, insurance, and age are all examples of factors that can influence the rates of an assisted living facility. The average cost ranges from $3,500 to $10,500 per month. Unfortunately, Medicare does not cover assisted living costs. It may be beneficial to put your home up for sale after moving into a facility to help balance the living expense. You can also draw money from personal savings. Additionally, most facilities offer VA discounts/benefits, so this is something to keep in mind. 

Prescription Drugs

Even though Medicare provides coverage for most prescription drugs, you are not guaranteed full coverage. There may be out-of-pocket expenses that are not insured. Certain drugs may also not be covered under the plan. Despite retirees’ Medicare coverage, prescription drug premiums can be a hefty sum to manage. The biggest way to work around this expense is through the use of a discount card. This can be done with applications like GoodRx that offer coupons for prescription drugs.

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