How can I pay for medical care after retirement?

  • Use your employer health-care coverage as long as possible. Then, after 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 only pay about half of your health care expenses. Allow for out-of-pocket expenses and premiums, some say as much as $250,000 or more for a 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.

  • 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 having 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.