A Healthful Guide to Planning for Medical Expenses

Updated on April 27, 2017

Linebaugh_9733By Jerry Linebaugh II

I’m an estate planning educator (not “estate planner”). I help plan lives, mostly focusing on finances in retirement. But my team and I use a holistic approach, looking at everything so clients can live how they want.

Undoubtedly, finances and health are inter-linked, especially as we age. And it takes a well-rounded, communicative planning team to succeed.

Too often we see people combine different planners’ advice. You wouldn’t do that with medical advice, so why do it with your finances?

Health Costs are #1

Medical costs will likely be your greatest expense in retirement. Some mistakenly believe they’re an unknown, but there’s good guiding information around.

For instance, Fidelity estimates a healthy 65-year-old couple retiring today needs $220,000 for health care.

That’s not surprising, since Merrill Lynch finds medical inflation has nearly quadrupled since 1982. (pdf) 

And a Nationwide Insurance survey shows people are basically terrified of health costs in retirement. As a result, 25% of respondents think they’ll never retire. Shockingly, 64% said they haven’t discussed retirement with an advisor, and only 22% who did mentioned health costs!

Medical costs matter in retirement, whether single or married. For couples, a costly health event can be catastrophic – after all, someone else is depending on those assets!

Plan and Execute

In my experience, only 15% of pre-retirees have tried estimating the true costs of care. 

To help, my team and I developed a comprehensive planning calculator. It differs from most as it allows for Social Security adjustments.

As a guide, the Merrill Lynch study suggests factoring in 9% annual health cost increases before age 65 and 7% annually afterwards.

Overall, be proactive and practical. Regardless if you’re approaching retirement or already there, it’s never too early (or late) to plan. Start now!

“Paper Poor”

You want to be poor on paper. Structure your assets to minimize tax liability and exposure, which also helps with health costs.

Is your house paid off? If so, move it into a trust. In fact, move all your large assets into trusts. You can set up different trusts for real estate, banking and more. Personally, I have them for different assets within my portfolio.

Doing so keeps them protected from the government and from being used to pay medical debts and the like. Use the system in your favor, it’s completely legal and transparent.


I cannot emphasize this enough – register for Medicare when you’re 65! You can even register a few months before to get the ball rolling. 

Failing to register can mean no coverage and non-reimbursable financial losses. Medicare isn’t retroactive, so receiving care while unregistered means you won’t get the money back.

In fact, some providers even put silent liens on patients’ homes or deny services altogether. And if you go to an emergency room uncovered thinking you’ll OK, think again. 

Asset seizure seminars are happening now at hospitals. You’ll get a hefty bill or they’ll seek your assets. That could mean bankruptcy as non-qualified accounts (bank accounts, brokerage, etc.) can be seized.

Seek a trusted advisor to find the right plan. Include your financial advisor because costs will partially determine the right coverage. You have two primary options:

Base Medicare (parts A and B) and a supplemental policy (Medigap)

A comprehensive Medicare Advantage plan – some offer vision and dental coverage too

Estate Planning Education

It’s a growing field because the need is abundant, but there aren’t many of us yet. Find one to create a comprehensive plan around your financial and personal health.

We get your financial house in order, including preparing for medical costs. Additionally, we help minimize fees, taxes and risk, while keeping your money working for you.

Demand they use a holistic approach, considering everything – including your actual health. I’m no doctor, but I know the power of prevention. A healthy lifestyle can help avoid medical costs, especially in retirement.

The Bottom Line

You can enjoy a great retirement when you grow your nest egg with minimal fees and a healthy focus on medical costs (pun intended). The earlier you start, the better. Time is an asset when it’s in your favor. Start now and make your golden years shine!


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