Budgeting for healthcare costs in retirement by StAK Insurance Solutions

Budgeting for Healthcare Costs in Retirement – Plan Ahead, Stay in Control

Healthcare Is One of Retirement’s Biggest Expenses

Budgeting for healthcare costs in Illinois is one of the smartest steps you can take toward a stable retirement. At StAK Insurance Solutions, we help Central Illinois retirees build realistic healthcare budgets, factor in premiums and prescriptions, and prepare for rising costs, so your retirement savings stay protected. Most people plan carefully for housing, food, and travel in retirement, but underestimate healthcare costs. Fidelity estimates the average 65-year-old couple will spend $315,000 on healthcare over their lifetime (not including long-term care).

Why Budgeting for Healthcare Costs in Retirement Matters

Without a plan, you risk:

  • Blowing Through Savings: Unexpected hospital stays or drug costs can eat retirement funds quickly.
  • Skipping Care: Fear of bills can cause people to delay needed treatment.
  • Losing Peace of Mind: Worrying about money is stressful — planning ahead removes uncertainty.

A solid healthcare budget gives you control over your finances and confidence to enjoy retirement.

Step 1: Know Your Fixed Costs

Medicare Part B Premiums

Every retiree pays a monthly Part B premium ($174.70 in 2025 for most people). Higher earners may pay IRMAA surcharges, we calculate this for you.

Medicare Supplement or Advantage Premiums

If you choose a Medigap plan, factor in monthly premiums ($100–$200 typical). Advantage plans may have $0 premiums but include copays and coinsurance.

Part D or Drug Coverage

Include Part D premiums or Advantage drug coverage costs.

Step 2: Estimate Your Variable Costs
  • Copays & Coinsurance: Based on doctor visits, ER visits, and specialist care.
  • Dental & Vision: Often not covered by Medicare — include separate plans.
  • Prescription Costs: Add copays, deductibles, and potential coverage gap expenses.
  • Hearing Care: Include hearing aids or exams if needed.

We use your current usage and health history to estimate realistic yearly costs.

Step 3: Plan for Inflation

Healthcare costs rise faster than general inflation, typically 5–6% per year. We build this into your plan so you’re prepared for higher costs 10–20 years down the road.

Step 4: Create a Healthcare Savings Strategy

Health Savings Accounts (HSAs)

If you have an HSA from pre-Medicare years, save receipts and use tax-free withdrawals later.

Emergency Fund

Set aside 3–6 months of expenses to cover unexpected hospital stays.

Supplemental Insurance

Consider dental, vision, cancer, or hospital indemnity policies to protect against big-ticket events.

Step 5: Review Annually

Healthcare plans and drug formularies change every year. We review your coverage annually to:

  • Check for premium increases
  • Shop for lower-cost options
  • Update your budget for new health conditions

For official information on Medicare and retirement health costs, visit Medicare.gov or the Illinois Department of Insurance.

Cost Example

A healthy 65-year-old might budget:

Expense Monthly Cost Annual Cost
Medicare Part B $174.70 $2,096
Medigap Plan G $150 $1,800
Part D Plan $20 $240
Copays & Rx $50 $600
Dental Plan $35 $420
Total $429.70 $5,156

Common Mistakes to Avoid

  • Budgeting Only for Premiums: Ignoring copays and deductibles leads to surprises.
  • Forgetting Dental & Vision: These costs add up quickly.
  • Not Accounting for Inflation: $5,000/year today may be $8,000/year in 15 years.

Failing to Review Annually: Sticking with outdated plans can cost you hundreds more per year.

How We Help

  1. Current Cost Audit: Review all your existing premiums and out-of-pocket expenses.
  2. Projection: Estimate 5-, 10-, and 20-year costs with inflation.
  3. Plan Adjustments: Suggest strategies to lower costs without sacrificing coverage.
  4. Ongoing Support: Annual check-ins to keep your plan current.

Visit here for additional Financial Education

Call to Action

Get control of your healthcare costs today.
We’ll build a custom budget that factors in your premiums, prescriptions, and future needs, giving you peace of mind.

Call Now: (309) 453-6546
Schedule Your Free Healthcare Cost Review

    Budgeting for Healthcare FAQs

    How much should I budget monthly for healthcare in retirement?

    Most retirees should plan for $400–$600/month including premiums, copays, and dental coverage.

    What if I’m healthy and rarely go to the doctor?

    Still budget for premiums and preventive care — and prepare for future health changes.

    Can I use an HSA after enrolling in Medicare?

    You can spend existing HSA funds but can no longer contribute once you’re on Medicare.

    How do I reduce prescription costs?

    We compare Part D plans annually, use preferred pharmacies, and look for manufacturer assistance programs.