Once people reach retirement, Youssef says spending often follows the line of a smile. Health care has the biggest impact during late retirement—making up one end of the smile.
- Early retirement. Spending often stays high during the early years of retirement. Many retirees travel and eat out more often. Health care coverage shifts from employer-sponsored insurance to Medicare.
- Middle retirement. Overall spending often drops to its lowest point during the second phase of retirement. Retirees in this phase spend more time closer to home. They’re active in their communities and with their families but aren’t spending their funds on expensive vacations. Health care costs may rise as these retirees age.
- Late retirement. During the late years of retirement, retirees are faced with more health issues. As a result, health care costs peak. If retirees need long-term care, these costs can be substantial.
There’s no getting around it: Health care is expensive—now and in retirement.
However, costs fluctuate, especially for retirees. Instead of making general calculations about how much you’ll need, consider a more personalized approach.
