How much should we budget for healthcare costs in retirement?

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For a typical healthy retiree in the United States, a realistic starting point is to budget approximately $8,500 to $11,000 per person, per year for out-of-pocket healthcare expenses, meaning a couple should set aside roughly $17,000 to $22,000 annually as a baseline.

• Account for Inflation and Rising Costs: Healthcare costs have historically outpaced general inflation by 1 to 2 percentage points annually. To maintain the same quality of care in twenty years, your current dollar amount will not suffice without regular adjustments. Consider using a high inflation rate, such as 6 to 8 percent, specifically for medical line items in your financial modeling.
• Factor in Premiums and Gaps: While Medicare covers many services, you will likely need a Part D drug plan and a supplemental Medigap policy to cover deductibles and coinsurance. The average annual premium for a standard Medigap plan and a Part D prescription drug plan can range from $1,800 to $3,000 per person. If you delay enrollment or lack long-term care insurance, costs for skilled nursing or assisted living can easily exceed $7,000 per month.
• Build a Dedicated Health Savings Buffer: The Centers for Disease Control and Prevention (CDC) notes that chronic conditions like heart disease and diabetes are the primary drivers of retirement health spending. Set up a separate high-yield savings account strictly for medical bills to prevent dipping into your general retirement investments during market downturns.
• Review Annual Medicare Choices: Costs change every year during the annual enrollment period. The National Institute on Aging (NIA) suggests reviewing your drug formulary and plan benefits every October to ensure your premium costs align with your actual usage and that you are not overpaying for coverage you do not utilize.

admin · 2026-09-29 10:09:51