COVID-19 UPDATE: For all American Retirement Institute registrants. Please read this statement about how classes will proceed during this changing environment

Four Ways to Combat High Health Care Costs in Retirement

Let’s try a quick thought experiment: Picture all your savings, your assets, and your income. Put all that together in a single pile. Now imagine that entire pile gone, just like that — poof!

This scenario has become reality for many retirees. It can become reality for many others, if not properly planned for.

How? Because of health care expenses.

The average retired couple will spend over $250,000 on health care. That alone is concerning. But, coupled with the fact the average American has nothing saved for retirement, the health care problem is real.

If you do have some retirement savings, a health issue can make your savings disappear like a cruel magic trick. What can you do to help defend against health care risks?

Four helpful tips for combating high health care costs

Here are four helpful tips for combating the danger of health care in retirement.

Talk to a professional

This is the first thing to consider. A qualified, licensed professional focused on retirement can help guide you through the health care minefield. Look for a professional who knows how health expenses will impact your taxes and the rest of your income.

With a full picture of your financial health, a licensed professional can walk you through preparing for and navigating any health crisis.

Think about adding whole life insurance

A whole life policy does more than provide a death benefit. It can also accumulate cash value, which you can withdraw as an income tax-free loan* to assist with a health emergency, if it were to arise.

Consider creating a Health Savings Account (HSA)

A Health Savings Account, or HSA, is a unique account designed to help offset out-of-pocket medical costs by providing a pre-tax account to accrue money in. Any money put into an HAS, along with any earnings you accrue on that money, is tax-free and stays that way even if you take those funds out, as long as it’s used for approved medical expenses.

Ask about long-term care insurance

Even if you don’t encounter health emergencies, you may need extra care toward the end of your life. Nursing and retirement home costs can be costly.

If you qualify, long-term care insurance can assist with expenses when you need an added level of care to live. Even if you don’t encounter a critical health problem in your lifetime, you’ll likely need assistance in some form. Long-term care insurance can help with those costs.

By talking to a professional, and exploring these options, you’ll have information to help navigate future health care risks. But there are even more ways to defend against these dangers, and a licensed professional can help point out solutions geared for your specific situation.

Health care is a big deal, especially the older you get. It can give life to the end of your years, but it can also bring ruin if you aren’t careful. By taking action, planning ahead, and consulting professionals, you’ll be better prepared for these challenges.

*The policy owner may access the living benefits of the insurance policy in a number of ways (the tax results assume the policy is not a Modified Endowment Contract) including: Dividends in cash. This will be received income tax-free until the owner recovers basis. Thereafter, the dividend is received as ordinary income. Surrendering cash value of paid-up additions. These funds will be received income tax-free up to the policy owner’s basis. Further surrenders will result in ordinary income. Loans are received income tax-free. Interest is due on the loan (but is paid by either cash, policy dividends, surrender of additions, or by borrowing the interest). Repayment of the loan is due upon the death of the insured (thereby reducing the total death benefit paid to the beneficiary). A loan affects a dividend positively or negatively on the loaned portion of the policy. In addition, repayment is required where the policy is surrendered in total. At such surrender, tax may be due depending on the policy owner’s basis and total cash value. If the policy lapses with a loan, the outstanding loan amount is considered cash received and may be taxable depending on the taxpayer’s basis.

Headshot of impact


contributor | , AL

View their website

Headshot of impact


contributor | , AL
View website