If there's one expense that climbs for pretty much all seniors in retirement, it's healthcare. In fact, in a 2017 Merrill Lynch study, workers across all age groups pointed to costly health issues as their greatest retirement-related fear. And wealthy Americans feel no differently. Specifically, 73% of seniors with $1 million or greater in assets are more worried about the cost of getting sick than anything else.

But if there's one way to combat these fears, it's getting educated on the cost of healthcare in retirement and planning for it by saving appropriately. And that's why you need to know that the average 45-year-old couple today will spend $635,142 in today's dollars on healthcare costs in retirement, according to data from HealthView Services. That's $1,730,774 in future dollars, in case you want to keep track.

A Medical Billing Statement on a blue clipboard, next to a blue calculator, with a blue stethoscope sitting on top of it.


But shocking as that number may be, what's just as notable is the extent to which healthcare costs seem to be going nowhere but up. Case in point: The average 65-year-old couple today will spend just $404,253 on medical care in retirement ("just" being a relative term), while the average 55-year-old couple today is looking at $498,962. That sizable jump to $635,142, therefore, is largely a product of inflation.

Now it's no secret that inflation affects seniors across virtually all expense categories -- but when it comes to healthcare, that impact is particularly extreme. That's because healthcare expenses are projected to rise at an average annual rate of 5.47%, which is almost triple the general U.S. inflation rate in recent years. Furthermore, that 5.47% is more than double the rate at which Social Security cost-of-living adjustments are expected to kick in. In other words, healthcare costs are likely to skyrocket, and those monthly benefits won't come remotely close to keeping up.

It's no wonder Americans are so worried.

There is, however, a bit of good news here. If you're still in your 40s and are anxious about the aforementioned figures, you have a solid opportunity to ramp up your savings in order to compensate. And the sooner you do, the greater your chances of affording healthcare once retirement becomes a reality.

Medicare and Social Security just won't cut it

Many workers neglect to save adequately for healthcare in retirement because they assume two things -- first, that Medicare will cover the bulk of their costs, and secondly, that Social Security will do a fabulous job of helping them stay afloat financially. Both expectations, however, are misguided.

Though Medicare does provide a host of critical health benefits to seniors, there are many, many essential services it doesn't cover, like vision care, dental visits, and hearing aids, to name just a few. Furthermore, though Medicare Part A, which covers hospital stays, is free for most enrollees, the program's other parts come at a premium. Add in the out-of-pocket expenses associated with Medicare, like deductibles and copays, and you're looking at quite a sizable sum -- and that's without major health issues.

Now let's talk about Social Security. Not only will it fail to keep pace with rising medical costs, as we noted above, but it's also by no means enough money for seniors to live off. In a best-case scenario, Social Security will replace about 40% of the typical worker's pre-retirement income, but most seniors need a minimum of 80% of their former earnings to cover the bills. And those are today's projections. Given the way healthcare costs are rising year over year, that 80% target might soon start to go up.

So what's the answer? It's simple: Start saving as much as you can, as soon as you can, so that you have the ability to pay your medical bills when you're older. If you're in your 40s and have access to a 401(k) plan through your employer, you have an opportunity to contribute up to $18,500 annually, and once you reach 50, that limit will rise to $24,500. Now most folks can't afford to part with quite that much cash, but if you work on boosting your savings rate over time, you stand to add quite a bit of money to your nest egg.

Check out the following table, which shows how much extra cash you might retire with based on the amount you're able to save:

Monthly Savings Amount

Total Accumulated Over 25 Years (Assumes a 7% Average Annual Return)








$1.138 million

Data source: author.

What this means is that if you're 42 years old with the goal of retiring at 67, and you set aside $18,000 a year, which doesn't come close to maxing out a 401(k) once you turn 50, you have the potential to retire with over $1 million if your investments average a 7% return, which is several points below the stock market's average. Even if you can't hit that threshold, saving $500, $750, or $1,000 per month over a 25-year period also yield some pretty impressive results.

If you're concerned about healthcare in retirement (which, frankly, you should be, at least on a basic level), then know that the earlier you take steps to save for those costs, the more manageable they'll be. And that's the kind of reassurance we all need.