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Creating a "Healthy" Plan for Retirement

Creating a “Healthy” Plan for Retirement

Strategies for paying your share of health care costs
Health care isn’t only one of the biggest retirement expenses—it’s also the toughest to budget. How long will you live? What kind of care will you need? Where will prices be then?

Because it’s hard to know those answers, it can also be hard to know how much to set aside for health care. You don’t want to save so little that you can’t cover the costs or so much that it jeopardizes other goals.

Key Takeaways
How much is enough?
Medicare isn’t free and doesn’t cover everything, which is why most retirees buy a supplemental “Medigap” policy to fill the holes. But neither of those plans covers most dental, vision and hearing services. When you add it all up, the average 65-year-old will pay about $5,200 this year—and costs are expected to more than triple to $18,360 by age 85, without even including the cost of long-term care.

Average Annual Out-of-Pocket Health Care Costs Per Retiree

Average Annual Out-of-Pocket Health Care Costs Per Retiree. Includes Medicare Part B (doctors, tests, and outpatient car), Medicare Part D (prescription drugs), Medigap plan, Dental, vision and hearing. Does not include long-term care.

Source: J.P. Morgan Asset Management, Guide to Retirement, 2018.

Factors to consider when planning health care costs

Health Status icon

Health Status

Costs shown in the chart (above) are averages. Plan to pay more if you need extra care or expensive prescription
Marital Status icon

Marital Status

The chart (above) shows costs per person; couples should prepare to pay more.
Current Age icon

Current Age

Costs shown are for people already in retirement. If you are under 65, your expenses will likely be higher due to health care inflation.
Life Expectancy icon

Life Expectancy

Depending on your family history and lifestyle, you may live longer than average—and incur higher expenses.
Five tips when planning and investing for health care costs
Put your plan on paper
Expect health care to rise faster than other expenses

You can’t always predict health care costs, but you can prepare for them. A sound plan combines investments with insurance to help pay the bills without jeopardizing retirement.

Don’t invest more aggressively…just invest more

Four investing variables—and how they relate to health care

Asset allocation

Investments earmarked for health care should be in line with your overall risk tolerance

Cost of goal

Insurance premiums and medical costs are largely beyond your control

Timing of goal

Medicare eligibility begins at age 65; early retirees may need to buy insurance

Savings rate

Increasing monthly savings is the best way to prepare for health care costs

Consider long-term care insurance
Start planning for health care at age 50


More factors to consider when planning health care costs

Income icon


Premiums for Medicare parts B and D are based on income—the more you have, the more you’ll pay.
Gender icon


Women typically live longer, meaning more years of expenses and a greater likelihood of needing long-term care not covered by Medicare.
State of Residence icon

State of Residence

Medical costs can vary widely by state, especially for nursing homes, assisted living facilities and other long-term care.
Medicare Reforms icon

Medicare Reforms

With Medicare projected to begin running out of money in 2026, any reforms to the system are likely to increase your share of the costs.5

Not all investment ideas referenced are suitable for all investors. Investing involves market risk, including the possible loss of principal. There is no guarantee that investment objectives will be reached. Diversification does not guarantee a profit or protect against a loss.

Opinions and estimates offered constitute our judgment as of the date of this material and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The views and strategies described herein may not be suitable for all investors. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.

Investment products and services are offered through J.P. Morgan Securities LLC (JPMS), a registered broker-dealer and investment advisor, member of FINRA and SIPC. Annuities are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. JPMS, CIA and J.P. Morgan Chase Bank, N.A. are affiliated companies under the common control of JPMorgan Chase & Co. Products not available in all states.

© 2019 JPMorgan Chase & Co.


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