Health care in retirement can cost nearly $200,000 — but many Americans underestimate or overlook this major expense.
Saving in a Health Savings Account (HSA) and choosing the right Medicare plan can help reduce out-of-pocket costs.
No matter your age, it’s never too early (or too late) to plan — every generation can take steps now to protect their future finances.
When most people think about retirement, they imagine travel, hobbies, and finally having time to relax. But there’s one major expense that often catches retirees off guard: health care. From doctor visits and prescriptions to Medicare premiums and long-term care, the costs can add up quickly — and many Americans aren't prepared.
To help break down what future retirees need to know, Whitney Stidom, vice president of Medicare Enablement at eHealth, spoke with ConsumerAffairs about how different generations can start planning now, practical steps you can take to protect your future finances, and more.
Set realistic expectations
When it comes to planning for retirement costs, Stidom recommends having realistic expectations about health care costs.
“In retirement, everyone eventually needs health care, and health care is expensive,” she said. “Our recent survey found that 76% of Americans underestimate or don’t know the average cost of health care in retirement, which amounts to nearly $200,000 for the average retiree.”
Money-saving tips
Stidom shared her top three tips for saving money for health care costs in retirement:
Pursue healthy habits. Get exercise, avoid unhealthy food, don’t smoke. Ask your doctor for advice based on your health and family history. The healthier your lifestyle, the better chance you have of avoiding the need for medical intervention.
Save money specifically for your retirement health care costs. If you’re still in the workforce, consider a Health Savings Account (HSA). In 2025 alone, you can save $4,300 (or $8,550 for a family) on a tax-free basis in an HSA. The money is yours to keep and can be invested to potentially grow in value over time. You can build up a health care expense nest egg in an HSA and use it in retirement to help cover deductibles, copayments, dental and vision care, or even massage therapy if medically necessary.
Make sure you’re in the right Medicare plan for your needs and budget. Whether you’re enrolling in Medicare for the first time or reviewing your plan choices during the fall Annual Enrollment Period (AEP), it’s important to understand your options. Medicare Advantage plans may provide coverage for many services not included in Original Medicare, such as prescriptions, dental, vision, hearing, and more. It can pay to shop around. Americans have access to an average of over 40 Medicare Advantage plans in their local area, and beneficiaries who comparison shop can potentially save an average of over $1,100 per year on medical costs.
The generational breakdown
Regardless of what generation you’re in, it’s important to start preparing for retirement. Stidom broke down her best advice for consumers trying to make the most of their money.
Retired: If you’re already retired, the best Medicare plan for you last year isn’t necessarily going to be the best plan for you in the new year. Your personal health and medical needs can change from one year to another, and so can your personal finances. If you’re enrolled in a Medicare Advantage plan or a Part D drug plan, your benefits and costs under that plan can also change from one year to another.
Boomers: For Boomers who are not yet retired, if you’re healthy and rarely visit the doctor, consider a plan with a Health Savings Account (HSA). If you’re enrolled in an HSA-eligible plan and age 55 or older, you can make an additional $1,000 contribution to your account each year to help you stockpile tax-advantaged funds for future health care costs.
Gen X: This group needs to think beyond their 401(k)s. Health care costs in retirement typically aren’t on the radar for most Gen Xers yet. They should consider HSAs as well, and start educating themselves about what Medicare is, how it works, what it covers, and what it doesn’t. Some Gen Xers have helped their parents through these questions, but it may soon be time to start applying those lessons to yourself. Gen Xers might also take stock of their personal health and lifestyle and think about where they’re headed 10 or 20 years from now, as now is the time to make healthier lifestyle decisions.
Millennials and Gen Zers: They may not be thinking much about retirement yet, or about health care costs. Since they’re younger and typically healthier, HSAs can be an especially good option for them. If you’re 30 years old today and have an employer that contributes to your HSA, you could potentially save tens of thousands of dollars – in part through the power of compound interest – for health care costs by the time you are retirement age.