Are you planning for a healthy retirement?

September 15, 2023

One of the challenges many retirees face is that while medical spending may increase, retirement income probably won't. Learn about the steps you can take to help preserve your retirement funds.

One of the expenses in your life that you can’t control is medical care. That can be a particular burden after you retire because medical expenses typically grow as we age. Your challenge as a retiree is that, while your medical spending may increase, your retirement income probably won’t. That means that medical expenses that aren’t covered by insurance might take an ever-bigger bite out of your retirement. An earlier generation of retirees could often expect to stay on the health plans of their former employers but, today, that type of coverage is typically unavailable.

Fortunately, there are steps you can take to help preserve your retirement funds from the high cost of medical expenses. Some options are best taken years before you retire, which is another reason to plan ahead. But there are even opportunities to “play catchup” just before or even during your retirement.

How much of a challenge are you facing? An average retired couple age 65 will likely need about $315,000 – after taxes – to cover healthcare expenses throughout their retirement.1 And that doesn’t count long-term care (LTC) expenses, which arise, for example, if you need a home health aide or move to a long-term care home.

Medicare doesn’t cover everything

Medicare takes care of several medical expenses for many retirees. But it doesn’t cover everything, and you can’t just “set it and forget it.” For example, you can’t enroll in Medicare before age 65 – but many people think about retiring as early as age 62, the first year they can qualify for (reduced) Social Security. Take early retirement and you may have to find non-Medicare funds to pay medical bills during those first three years. Alternatively, this could be the driver that leads you to retire only when Medicare is available to you.

Also, Medicare doesn’t cover everything – notably, it doesn’t pay for LTC expenses, which can come to tens of thousands of dollars or more. Medicare generally doesn’t cover vision care and dental expenses, unless you have an additional Medicare Advantage plan. Over-the-counter medicines are generally uncovered. Even for the expenses that Medicare does cover, you can still be responsible for deductibles, co-pays, and other costs.2

What Medicare does pay for

Despite these gaps in coverage, Medicare remains the foundation for most plans to cover medical expenses in retirement. Medicare Part A covers the big stuff: hospital stays and procedures. Medicare Part B covers smaller but more frequent expenses: visits to your physicians and outpatient care. Medicare Part D covers prescription drugs.

And, as mentioned above, there’s Medicare Advantage. Private insurers, rather than the government, offer these plans. They more or less cover what you’d get from Medicare Parts A, B, and D, depending on the particular plan. Insurers may also choose to provide some combination of dental, vision and auditory coverage.

If you want to postpone receiving Medicare past age 65, be sure to visit the Medicare website or contact a financial planning professional to see if you still need to register to avoid paying a penalty on your premiums later on.

Long-Term Care insurance calls for long-term planning

As its name suggests, LTC insurance helps pay for a particular type of expense: the cost of in-home health aides or a long-term care home. It can help keep you in your own home longer and help pay for appropriate care when that becomes necessary. Because Medicare doesn’t cover these costs, LTC insurance can be a great complement to Medicare.

No one wants to think about needing this type of care, but many do, and the expense can be tremendous. This is the type of insurance you should think about even decades before you retire or could become infirm, since the coverage can be better and the cost lower the younger you are when you buy it. If you’re at or approaching retirement age or have pre-existing medical conditions that suggest the likelihood of needing LTC, the cost could be prohibitive.

It's too late for LTC insurance. Now what?

Did you miss the time window for affordable LTC insurance? Don’t worry. There are other options available to you – and these are worth your consideration even if you do have LTC insurance.

  • Health Savings Accounts (HSAs) – Want to save for future health care costs even before you qualify for Medicare? You can do so with an HSA, plus you can use these accounts to pay some medical premiums, including Medicare and LTC insurance. They may help to pay for preventive care including physical exams. And if you qualify for catch-up pension retirement contributions, you can direct them to your HSA.3
  • Your employer’s healthcare plan, or your spouse’s – If you’re on your company’s healthcare plan or your spouse’s, that may be a better option than Medicare, depending on its coverage ·         and costs. You or your spouse can check with the employer’s HR, or with your financial planning professional, about the details, whether you qualify, and what your best options are.4
  • Annuities – Here’s another option. Many people purchase a deferred annuity that doesn’t begin payments until later in retirement – at age 80, for example – when they’re more likely to experience significant medical or LTC expenses. If the policyholder dies before payments begin, some annuity plans allow for the remaining benefits to be paid to a designated beneficiary. You’ll want to work closely with a financial professional to determine if this is the case and to ensure you understand the terms of the contract.

As always when considering financial or retirement planning, your financial planning professional can explain your options and help craft a plan tailored to your specific needs. 


Annuities are long-term, tax-deferred vehicles designed for retirement. Variable annuities involve investment risk and may lose value. Earnings are taxable as ordinary income when distributed. Individuals may be subject to a 10% additional tax for withdrawals before age 59½ unless an exception to the tax is met.

Before investing, investors should carefully consider the investment objectives, risks, charges, and expenses of the variable annuity and its underlying investment options. The current contract prospectus and underlying fund prospectuses provide this and other important information. Please contact your financial professional or the Company to obtain the prospectuses. Please read the prospectuses carefully before investing or sending money.



1., How to plan for rising health care costs

2. Rebecca Lake, How to plan for medical expenses in retirement,, December 30, 2022. 

3. Ibid.

4., How to plan for rising health care costs.

Jackson, its distributors, and their respective representatives do not provide tax, accounting, or legal advice. Any tax statements contained herein were not intended or written to be used and cannot be used for the purpose of avoiding U.S. federal, state, or local tax penalties. Tax laws are complicated and subject to change. Tax results may depend on each taxpayer’s individual set of facts and circumstances. You should rely on your own independent advisors as to any tax, accounting, or legal statements made herein.

Annuities are issued by Jackson National Life Insurance Company® (Home Office: Lansing, Michigan) and in New York, by Jackson National Life Insurance Company of New York® (Home Office: Purchase, New York).  Annuities are distributed by Jackson National Life Distributors LLC, member FINRA. These contracts have limitations and restrictions. Jackson issues other annuities with similar features, benefits, limitations, and charges. Contact Jackson for more information.

Jackson® is the marketing name for Jackson Financial Inc., Jackson National Life Insurance Company®,  and Jackson National Life Insurance Company of New York®. Jackson National Life Distributors LLC.