Healthcare costs in retirement depend on your coverage, health needs and how long you live. A useful starting point is a personal budget for premiums and care, together with a plan for expenses insurance may not cover.

U.S. health spending reached $5.3 trillion in 2024, according to CMS historical expenditure data. That is a national total, not an estimate of what an individual retiree will spend.

Build a healthcare budget around your circumstances

A single lifetime estimate can hide important assumptions. Your costs can change with your location, coverage, prescriptions, longevity and need for extended care. Review these items separately:

• Medicare or other health-plan premiums, including any applicable income-related adjustments.
• Deductibles, copayments and coinsurance under your actual coverage.
• Prescription costs, including drugs your plan does not cover.
• Dental, vision and hearing expenses and any relevant coverage limits.
• Potential long-term care needs, which require separate planning.

Explore Medicare basics, Part D prescription coverage and long-term care planning before choosing how to fund these expenses.

Match essential expenses with dependable income

List your expected Social Security, pension and other income, then compare it with essential expenses. Keep access to emergency savings in mind. An insurance product may address one need while introducing costs or restrictions elsewhere; no product can guarantee that every retirement or healthcare expense will be covered.

Where a fixed indexed annuity may fit

A fixed indexed annuity is a long-term insurance contract, not a direct investment in a market index. It may provide lifetime income through annuitization or an optional rider, subject to contract terms and any rider costs. The insurer’s claims-paying ability backs its guarantees.

Index-linked interest is determined by contract rules, which may include caps, participation rates or spreads. A zero-percent index-credit floor does not mean every contract value is protected from charges or withdrawals. Surrender charges and an applicable market value adjustment can reduce money available when you withdraw.

A permitted withdrawal without a surrender charge is not necessarily tax-free. Tax consequences depend on your circumstances. Some contracts offer enhanced benefits for qualifying care needs; availability, triggers and limits differ. An annuity is not a substitute for reviewing your health or long-term care coverage.

Sources: NAIC fixed deferred annuity buyer’s guide and NAIC annuity overview. Ask for the specific contract, disclosure and rider terms before making a decision.

Questions to bring to a conversation

• Which healthcare costs are already covered, and which remain my responsibility?
• How much money must remain readily accessible?
• What benefits are guaranteed, what is not guaranteed, and who backs the guarantees?
• What fees, waiting periods, exclusions or withdrawal restrictions apply?
• How should I coordinate insurance decisions with my tax, legal and investment professionals?

Talk through your insurance questions

Anil Khanchandani, CLTC®, is an independent licensed life and health insurance producer. He explains available insurance options and their trade-offs, and does not provide legal, tax or investment advice. Products are offered only where he is licensed and appointed, subject to carrier and state requirements.

There is no consultation or service fee and no obligation to apply. Anil receives commissions from insurance carriers when policies are placed. Contact Anil or book a conversation. For Medicare inquiries, call (201) 831-1244; for other insurance questions, call (201) 410-2003.