How can I pay for medical care after retirement?

  • Use your employer health-care coverage as long as possible. Then, at age 65 or later, upon retirement or your spouse's retirement (if either or both of you are working beyond age 65), purchase Medicare Parts B and D:
    • Part B covers most doctor, hospital and related expenses.
    • Part D provides a prescription drug benefit
  • Never drop one type of health care coverage until the new or replacement coverage is in force.

  • Remember that Medicare is not a free pass; in fact, it may pay only about half of your health care expenses. Allow for out-of-pocket expenses and premiums (as much as $250,000 or more for a 65 year old couple over their lifetime in retirement) depending on longevity and significant expenses from long-term illness and disease.

  • Examine long-term healthcare insurance options carefully; the costs may outweigh the benefits. To make the right choice for you, get unbiased professional advice about your options from a financial planner or your local State Health Insurance Assistance Program (SHIP) office.

  • Many retired Americans do not need life insurance, except perhaps to cover burial expenses and if they still have ongoing debt or mortgage obligations.

  • Consider placing a portion of your savings in an immediate fixed annuity (a financial product that provides a guaranteed monthly income over your lifetime or a period of years). Study and compare these products carefully, and make sure you buy an annuity that is adjusted for inflation at a reasonable cost.

  • Don’t purchase insurance products unless you understand how they work and how the seller is getting paid.