Depending on health status, cost of living and type of supplemental coverage, the median 65-year-old woman’s annual health-care costs in 2018 could range from $3,000 to $26,200.
Of course, the possibility that a retiree will need long-term nursing or at-home care also looms over health-care planning -- yet Vanguard notes that half of individuals will incur no long-term care costs, while 15 percent of individuals will incur long-term care costs of more than $250,000.
In Vanguard’s opinion, planning for health-insurance premiums and long-term care costs should be separate endeavors.
In order to cover potentially higher medical and long-term care costs, future retirees should not just build assets that can serve as an annual source of income, but also a health care contingency reserve to help cover long-term care costs and other unexpected expenses.
If contingency funds run short, retirees can explore options like a family caregiver, using their home equity, or exhausting Medicaid and other resources.