Three things to know about retirement health care

When you envision retirement, you probably picture yourself traveling the world, spoiling your grandkids or taking up that new hobby you’ve always wanted to try. Spending a large chunk of your nest egg on medical expenses doesn’t likely come to mind – but unfortunately, it’s simply a reality for Americans today.

According to the Employee Benefit Research Institute, a 65-year-old couple with median prescription-drug expenses will need $241,000 in savings just to pay for health care. And even then, they’ll only have a 90-percent chance of covering all their medical bills.

Whether you’re retiring in five or 15 years, planning for your retirement health care is essential to avoid outliving your money. Here are three things you need to know:

Medicare doesn’t cover everything. Unless you have supplemental insurance, you’ll have to pay for certain services out of pocket. For example, most dental care, long-term care, hearing aids and routine foot care are just some of the items and services not covered by Medicare.

If you retire early, you may need to buy individual health insurance. Medicare doesn’t kick in until age 65, so if you retire before then, you could have a serious gap in coverage. Include the potential costs of interim health insurance in your retirement-planning strategy.

You’re likely to develop a chronic disease as you age. Roughly 80 percent of older adults have at least one chronic condition, or a persistent health problem that lasts for years. Such conditions could drastically increase your out-of-pocket healthcare costs as you age.

To ensure you don’t face sticker shock in your golden years, start planning now for the costs of your future health care and include those expenses in your overall retirement budget. An investment advisor or financial planner can help you estimate how much you’ll need – and create a plan for achieving your healthcare savings goals.