Many folks dream of retiring early and getting to plan out their days as they choose. But not everyone gets to realize that goal. Those who delay retirement savings, for example, are less likely to achieve that milestone ahead of their peers. But in a new TD Ameritrade survey, Americans identify healthcare expenses as their primary barrier to early retirement.

Among U.S. adults aged 45 and older with over $250,000 in investable assets, 57% point a finger to health costs as their main impediment to leaving the workforce. And when we think about how much people tend to spend on healthcare both during their working years and in retirement, that makes sense.

Man in bed being examined by a doctor


If you want to retire early but fear that medical expenses will hold you back, the good news is that you can take steps to reduce your costs both during your working years and your golden years. At the same time, planning for the latter part of your life can put you in a more secure position once you do retire and your healthcare expenses start escalating.

Lower your healthcare spending

Overspending on healthcare often boils down to having the wrong insurance, or not understanding how your health plan works. Your natural inclination might be to choose a plan with the lowest premiums available to you, but that might result in inadequate coverage that costs you more out-of-pocket overall. A better bet, therefore, is to shop around for a health plan that will give you the coverage you need, keeping in mind that what you pay in higher premiums, you might save on deductibles and copays.

At the same time, make sure you understand your health benefits -- a 2017 study by Liazon found that 48% of Americans don't. Staying in network, obtaining referrals, or getting pre-authorized for certain procedures or diagnostic exams could lower your out-of-pocket costs tremendously, so if you're not sure what services you're entitled to under your health plan and what your associated financial obligation is for them, ask.

Being smart with prescriptions will also help you keep your health-related spending in check. That means requesting generics when possible to shave down your copays, buying in bulk to snag discounts, and asking for samples when you visit the doctor, especially for drugs your insurance company considers high-tier.

Incidentally, all of this advice applies to workers and retirees on Medicare alike. You have several choices for choosing a Medicare plan (you get to pick your own Part D drug plan under original Medicare, or you can forgo original Medicare and get an Advantage plan instead), so be sure to do your research and find the plan that gives you the best coverage for your specific needs. At the same time, understand what services your plan does and doesn't cover, and plan around that by either securing supplement insurance or budgeting appropriately for higher out-of-pocket bills.

Plan ahead for retirement

Being smart about your healthcare choices will help keep your spending in check, but at the end of the day, certain medical expenses are just plain unavoidable. You can plan for them, however, by boosting your savings so that you have the money to cover them, both during your working years and in retirement.

One savings option you might consider is a health savings account, or HSA. You're eligible to contribute to one if you have a high-deductible health plan (defined as $1,350 or higher for individual coverage, and $2,700 or higher for family coverage), and currently, you can put in up to $3,500 annually as an individual, or $7,000 at the family level. If you're 55 or older, you can make a $1,000 catch-up contribution on top of whatever limit you qualify for.

Not only do you get to deduct your HSA contributions on your taxes up front, but the money that sits in your account gets to grow tax-free as long as you use it for qualifying medical expenses. A robust HSA could come in quite handy in retirement, thereby alleviating some of the strain you might otherwise face from medical bills.

Boosting your IRA or 401(k) will achieve a similar purpose. Though these accounts aren't earmarked for healthcare specifically, the more you sock away in either one, the more money you'll have available to cover your medical costs as a senior.

Healthcare is an inevitable expense that applies at any age, but you don't need to let it destroy your dreams of early retirement. Be savvy about your medical spending and use tools like the HSA to your advantage. With any luck, that'll help you retire when you want to.