Healthcare Costs Can Shock Retirees

Healthcare Costs Can Shock Retirees

Posted

by Anna Sergunina

on May 18, 2025

A 2024 study of potential retirees funded by Fidelity Investments found that they were retiring four years before they planned. Most of them had not qualified for Medicare because of age.  A study by the Kaiser Foundation reported that fewer government and fewer private employers provide retiree health care coverage than in the past.

What are boomers going to do? Panic? Take part-time work? Apply for government benefits like Medicaid? Spend a huge amount of their savings on healthcare premiums and deductibles/co-payments?  It’s showing up as the top concern in current political polling.

As financial planners, we encourage our clients and readers to plan ahead. Latest estimates for retiree healthcare expenses exceed $243,000 over a retiree couple’s lifetime. Several studies put this at $601,000 and beyond. That exceeds the budget ability of most baby boomers. Younger generations may be even more at risk as government and other employers cannot keep up with benefits that inflate at a much higher rate than other expenses.

What are the strategies that potential retirees (and some current retirees) can employ?

1. Delay retirement and continue to use government or private employer benefits as long as they can
2. Make an effort to understand COBRA coverage costs in place of private insurance or health exchange coverage as it currently exists
3. Open and fund a Health Savings Account during open enrollment this year, if offered
4. Explore dental insurance since this can be one of the most expensive emergencies anyone can experience employed or retired
5. Look into Medicare Advantage Program benefits, costs, and coverage,e including limitations on providers and re-enrolling in regular Medicare
6. Understand what types of Reverse Mortgages are available to fund healthcare expenses
7. Look at the Medicare Open Enrollment options in the October-December time frame. See how flexible Medicare can be, or how inflexible it might be for you.

For the younger generations:

1. Stay healthy
2. Save more for healthcare out-of-pocket costs
3. Appreciate that benefits can change and will most likely be less than currently offered
4. Open enrollment offers you opportunities, too. Now is the time to understand and budget for them.