You have heard it all before, maybe you have seen these numbers too. No need to panic though.
Look at it this way, what will you spend on food, rent, property taxes, etc. over your lifetime starting at age 65? Those can be big numbers too, but I doubt you have looked at spending on those items as a lump sum.
Your Medicare premiums will come from your Social Security check so they are budgeted for you. Depending on the supplemental insurance you have, you may pay little or nothing for most out-of-pocket costs. My out-of-pocket costs are capped at $1700 a year. If you choose a Medicare Advantage plan you may have coverage for dental and vision care and pay little out-of-pocket.
Sure, health care is likely to be an ongoing and increasing expense in retirement and you need to factor it in as part of your monthly living expenses, but for many, perhaps most people those monthly costs will be less than before retirement.
This gets to how much you need to retire. You need to generate an income stream that is close to 100% of your pre-retirement income and you need an emergency fund and the ability to replenish it as needed … in case it’s depleted from heath care bills😷.
When planning, consider that an average couple will have monthly Medicare and supplemental coverage premium bills of about $741. Very low income individuals may pay less and because of income based Medicare premiums, couples with an income above $170,000 will pay more.
The average healthy 65-year-old couple retiring this year will need $387,644 in today’s dollars just to cover lifetime health care costs.
Total lifetime costs that make up that $387,644 figure include premiums for Medicare Parts B and D, dental, and supplemental insurance as well as all out-of-pocket outlays for medical, dental, hearing and vision.
NOTE: Other sources use $285,000 or so, so the fact is nobody knows what you will spend or when you may spend it.