Is Healthcare Built Into Your Retirement Plan?
Healthcare Is One of the Biggest Retirement Expenses
Many people spend years saving for retirement without fully accounting for one of its largest expenses: healthcare.
Medicare provides a foundation, but it doesn't cover everything. Gaps in coverage, out-of-pocket costs, and potential long-term care needs can add up significantly over a retirement that lasts 20 to 30 years.
What Medicare Does and Doesn't Cover
Medicare covers many essential healthcare services, but common gaps include:
• Dental, vision, and hearing
• Most long-term care
• Prescription drug costs beyond Part D
• Out-of-pocket costs for hospital stays
Understanding those gaps early helps you build a plan that accounts for the full picture, not just the coverage you're automatically enrolled in.
What Is IRMAA?
IRMAA (Income-Related Monthly Adjustment Amount) is a surcharge that increases Medicare Part B and Part D premiums for higher-income retirees.
In 2026, the standard Medicare Part B premium is $202.90 per month. But if your modified adjusted gross income (MAGI) from 2024 exceeded $109,000 as a single filer, or $218,000 for married filing jointly, you pay more. The surcharge is calculated on a sliding scale, and in 2026, total Part B premiums for higher-income beneficiaries range from $284.10 to $689.90 per month (Source: CMS, November 2025).
One important detail: Medicare uses your income from two years prior to set your premium. That means the income decisions you make today can affect your Medicare costs two years from now, and proactive planning can help you manage it.
Long-Term Care: Planning Ahead
Long-term care is one of the most underprepared areas in retirement planning. Options to consider include:
• Home health aides
• Assisted living
• Family caregiving
• Insurance options
Planning for long-term care before it's needed gives you more choices and more control.
Healthcare Planning Is Financial Planning
Healthcare decisions directly affect:
• Retirement income
• Tax planning
• Investment withdrawals
• Estate planning
• Cash flow
That's why healthcare planning shouldn't happen separately from your financial plan.
Frequently Asked Questions
How much should I budget for healthcare in retirement?
Costs vary depending on your health, Medicare choices, and retirement lifestyle. Including healthcare expenses in your retirement income plan can help create a more realistic budget.
Is Medicare enough?
Medicare provides important coverage but generally doesn't pay for every healthcare expense. Many retirees choose additional coverage based on their needs.
What is IRMAA?
IRMAA is an income-related adjustment that may increase Medicare premiums for higher-income retirees.
Should I plan for long-term care?
Long-term care planning is worth discussing before retirement, even if you ultimately decide insurance isn't the right fit.
Planning Ahead Can Make a Difference
Healthcare isn't something to figure out after retirement. It's something to prepare for before retirement.
By incorporating healthcare into your overall financial plan, you can better understand your options and make decisions with greater confidence.
