Healthcare Cost Estimator
Plan for healthcare expenses in retirement. Estimate costs from early retirement through Medicare and beyond.
Healthcare Planning for Retirement
The Retirement Healthcare Challenge
The Shocking Reality: A 65-year-old couple retiring today will need approximately $315,000 for healthcare costs in retirement (Fidelity 2023 estimate).
Early Retiree Alert: If you retire before 65, you'll face the "healthcare gap" - the expensive years without Medicare coverage that can cost $15,000-$25,000+ per year.
Healthcare Coverage Timeline
Before Age 65: The Coverage Gap
- ACA Marketplace (Obamacare) - $500-$2,000+/month
- COBRA (up to 18 months after leaving job)
- Spouse's employer plan
- Healthcare sharing ministries
- Part-time job with benefits ("Barista FIRE")
Age 65+: Medicare
- Part A (Hospital): Usually free if you paid Medicare taxes 10+ years
- Part B (Medical): ~$175/month (2024), income-based surcharges
- Part D (Drugs): ~$35/month average
- Medigap/Supplement: ~$150-$400/month
- Medicare Advantage: Alternative to Original Medicare
Age 80+: Long-Term Care Risk
- 70% of people over 65 will need some form of LTC
- Nursing home: $8,000-$12,000/month
- Assisted living: $4,500-$7,000/month
- Home health aide: $25-$35/hour
- Average need: 2.5 years of care
ACA Subsidies: The Early Retiree's Best Friend
Key Insight: Keep your taxable income low to maximize ACA subsidies. This can reduce premiums by 50-90%!
Subsidy Eligibility (2024)
- Under 150% FPL: Premiums capped at 0-2% of income
- 150-200% FPL: Premiums capped at 2-4% of income
- 200-250% FPL: Premiums capped at 4-6% of income
- 250-400% FPL: Premiums capped at 6-8.5% of income
- Enhanced subsidies through 2025 (may be extended)
Strategy: Live off taxable account basis (not gains), use Roth conversions strategically, and time income to stay under 400% FPL (~$58,000 single, ~$78,000 couple in 2024).
The HSA: Triple Tax Advantage
Best retirement healthcare savings vehicle: The Health Savings Account offers three tax benefits no other account provides.
1
Tax-Deductible
Contributions reduce taxable income
2
Tax-Free Growth
Investments grow without taxes
3
Tax-Free Withdrawals
For qualified medical expenses
2024 Limits: $4,150 individual / $8,300 family + $1,000 catch-up if 55+
After 65, HSA works like traditional IRA for non-medical expenses (taxed but no penalty)
Healthcare Planning Mistakes
- Underestimating costs (plan for $300,000+ per couple)
- Not maximizing HSA during working years
- Missing Medicare enrollment windows (penalties are permanent)
- Retiring at 62 without healthcare plan until 65
- Ignoring long-term care risk (70% will need it)
- High income in early retirement killing ACA subsidies
Healthcare Action Plan
- Max HSA contributions every year starting now
- Don't spend HSA - invest it and let it grow for retirement
- Plan taxable income to maximize ACA subsidies
- Research your state's ACA marketplace costs
- Consider long-term care insurance at age 55-60
- Mark Medicare enrollment dates on calendar (Initial: 7 months around 65th birthday)
Frequently Asked Questions
FIDELITY'S 2023 ESTIMATE:
A 65-year-old couple retiring today needs approximately $315,000 for healthcare costs throughout retirement. This includes:
• Medicare Part B premiums
• Medicare Part D (prescription drugs)
• Medigap or Medicare Advantage premiums
• Out-of-pocket costs (deductibles, copays)
• Dental, vision, hearing (not covered by Medicare)
DOES NOT INCLUDE:
• Long-term care (nursing home, assisted living)
• Over-the-counter medications
• Medical equipment not covered by insurance
EARLY RETIREES (Before 65):
Add $15,000-$30,000 per year for each year before Medicare eligibility:
• Retire at 62: Add $45,000-$90,000
• Retire at 60: Add $75,000-$150,000
• Retire at 55: Add $150,000-$300,000
WITH LONG-TERM CARE:
If you need nursing home care (70% probability), add:
• Average stay: 2.5 years
• Average cost: $8,000-$10,000/month
• Additional cost: $240,000-$300,000
TOTAL LIFETIME HEALTHCARE:
Conservative estimate for couple: $400,000-$600,000