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909 N. Mayfair Road
Suite 200
Wauwatosa, WI 53226

John Coloso

(414) 431-0488


Budget Myths Debunked: Healthcare in Retirement

| October 01, 2020

Over the course of retirement, healthcare expenses are anticipated to cost $280,000, on average, for a couple turning age 65 today.Yet, many retirees significantly underestimate their out-of-pocket healthcare costs, assuming that Medicare and private insurance will cover far more than it does. Below we’ve debunked four of the most common myths about healthcare costs to help you make confident and informed decisions about planning for healthcare in retirement.

MYTH #1: Medicare will cover all of my healthcare expenses. Misinformation about what Medicare does and does not cover can lead many people to underestimate how much money they may need to cover healthcare expenses after age 65. While Medicare Parts A and B provide coverage for most hospital stays, emergency room visits, certain lab tests, and doctor’s office visits, you may still be responsible for a portion of these costs, including copays. Medicare also does not cover prescription drugs administered outside of a hospital setting and most dental, hearing, vision, and long-term care services, which can add up quickly over time.

MYTH #2: I don’t need to purchase a prescription drug plan. Certain prescription drugs can cost hundreds or even thousands of dollars per month, especially those used to treat rare conditions or where a generic version is not available. Purchasing a prescription drug coverage plan, such as Medicare Part D or certain Medicare Advantage plans offering prescription drug coverage, may help lower your out-of-pocket healthcare expenses in retirement.

MYTH #3: My Social Security benefits will cover anything Medicare doesn’t cover. While most retirees rely on Social Security benefits to provide a portion of their income needs in retirement, keep in mind that Social Security is only expected to replace about 40% of the average worker’s pre-retirement income in retirement.Without additional income from sources such as a company pension, employer retirement plan(s), and personal savings, most retirees find that Social Security alone falls short of paying for all of their expenses in retirement.

MYTH #4: It’s less expensive to age at home. Remaining in your home is not always the least expensive option if you require assistance with activities of daily living, such as cooking, cleaning, dressing, bathing, and transportation. A 2018 study reports the average annual cost for home health aides is $50,336.While that’s roughly the same as the average cost of an assisted living facility at $48,000 a year,it’s important to consider the other costs associated with remaining in your home. These may include retrofitting your home with wheelchair ramps and safety features, in addition to paying your mortgage or rent, homeowner’s insurance, real estate taxes, utilities, and regular maintenance and repairs— all of which can quickly push the cost of remaining in your home with the assistance of paid caregivers well over the estimated average.

Call the office today if you have questions or concerns about how you will pay for healthcare costs in retirement.