We all know life throws us curveballs. Retirement is supposed to be the time when you finally relax and enjoy what you’ve worked for — but what happens when an unexpected medical issue blindsides your plans?

If you’re between the ages of 55 and 80 and you’re banking on Medicare to cover your health care needs in retirement, you might want to take a closer look. Medicare is a great foundation, but it’s not the whole house. And when it comes to retirement planning, especially in today’s inflation-heavy world, ignoring health care costs is like leaving the front door wide open in the middle of a Utah snowstorm.

What Medicare doesn’t cover

First, let’s be honest about what Medicare won’t do. It won’t cover most long-term care needs — things like assisted living, in-home help with bathing and dressing or memory care. It also doesn’t cover routine dental, vision, hearing aids or foot care. And if you’re surprised by that, you’re not alone.

Even with Medicare Part A and B (and let’s say you’ve added a Medigap policy or a Medicare Advantage plan), you could still be left paying thousands out of pocket for co-pays, prescriptions and ongoing treatments — especially if you develop a chronic illness.

According to Fidelity’s 2024 Retirement Health Care Cost Estimate, the average 65-year-old couple retiring this year will need around $315,000 just to cover health care costs in retirement — and that doesn’t even include long-term care.

The silent budget buster: Long-term care

Long-term care is the elephant in the retirement room. Most people don’t want to think about it, let alone plan for it. But roughly 70% of Americans over age 65 will need some form of long-term care during their lives.

The average annual cost for a private room in a nursing home in Utah? Over $100,000 a year. Assisted living can cost $50,000 or more annually. And most of that, again, is not covered by Medicare.

So, what’s the plan?

Strategy No. 1: Build a “health care buffer” into your retirement plan

One of the first things I ask clients is, “Have you set aside a portion of your retirement savings specifically for health expenses?” This isn’t just about having a rainy-day fund. It’s about being intentional — earmarking a portion of your assets for future health care-related costs.

That could be as simple as allocating a chunk of your IRA or nonqualified savings for medical costs — or setting up a separate investment vehicle designed for tax-advantaged growth that can be tapped for these needs.

Strategy No. 2: Consider a hybrid long-term care solution

Traditional long-term care insurance can be expensive, and it often works like car insurance: Use it or lose it. But newer hybrid options — such as life insurance policies or annuities with long-term care riders — can give you more flexibility. If you don’t use the long-term care benefit, your family still receives a death benefit or remaining account value.

These solutions allow you to reposition assets, often in a tax-efficient way, while still protecting yourself from the potentially devastating costs of care.

Strategy No. 3: Know the role of HSAs (if you qualify)

If you’re still working and enrolled in a high-deductible health plan, contributing to a Health Savings Account, or HSA, is one of the smartest moves you can make. It’s the only triple tax-advantaged account:

• Contributions are tax-deductible.
• Growth is tax-free.
• Withdrawals for qualified health care expenses are tax-free.

Even in retirement, you can use HSA funds to pay for premiums, co-pays, dental work, vision and more.

Strategy No. 4: Prescription planning

Don’t overlook the impact of prescription drug costs, which have been rising rapidly. Medicare Part D offers coverage, but there are gaps — and the infamous “donut hole” still catches many retirees off guard.

Each year during open enrollment, review your Part D plan. Make sure it still fits your needs. And consider generics, mail-order services or discount programs that can help minimize out-of-pocket expenses.

Strategy No. 5: Use income planning to protect against rising costs

One of the most overlooked tools in this conversation is guaranteed income. When a portion of your income is protected — say, from a fixed index annuity with an income rider — you’re less likely to be forced to dip into principal if health expenses spike.

Think of it like this: If your base expenses (including health-related ones) are covered by guaranteed income sources, you’re sleeping a lot better at night.

Final thought: Expect the unexpected — and plan anyway

You wouldn’t buy a house without insurance. So why go into retirement without a plan for the biggest expense you may face?

Planning for health care costs beyond Medicare isn’t about fear — it’s about freedom. When you’ve accounted for the “what ifs,” you can enjoy your retirement with confidence instead of crossing your fingers and hoping for the best.

You’ve worked hard to get here. Let’s make sure one unexpected diagnosis doesn’t undo decades of smart saving.

Lyle Boss, The REAL BOSS Financial, endorsed by Glenn Beck as the premier retirement advisor for Utah and the Mountain West States. Boss Financial, 955 Chambers St. Suite 250, Ogden, UT 84403. Telephone: 801-475-9400.