When it comes to money, there's a lot you may have on your mind. Are you saving enough for retirement? How are you going to pay for your children's college tuition? Will you be able to afford that family summer vacation this year?
Amid all those concerns, there's one cost that worries people the most: healthcare expenses.
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A whopping 69% of middle-income Americans are concerned that they won't be able to afford to pay for a major medical expense, according to a recent report from financial institution Primerica. That's more than the 43% who are concerned they're not saving enough for retirement, according to the survey, and the 24% who are afraid of losing a job.
It's a legitimate concern, too -- especially for retirees. The average 65-year-old couple retiring now can expect to spend roughly $285,000 on healthcare costs alone during retirement, according to the latest research from Fidelity Investments. Considering the median amount baby boomers (the generation closest to retirement) have saved is just $152,000, according to the Transamerica Center for Retirement Studies, that means most soon-to-be retirees won't even be able to afford healthcare costs in retirement -- let alone be able to cover all their other financial necessities.
Medicare can help with some healthcare-related expenses in retirement, but it doesn't cover everything. If you want to prepare yourself the best you can against medical bills, it's important to understand the role Medicare plays in retirement, as well as how to boost your savings on your own.
What to expect from Medicare
Medicare is a great resource in retirement, and it can help cover a lot of your healthcare needs. But you're still responsible for premiums, deductibles, and coinsurance; original Medicare generally doesn't cover things like routine dental care, routine eye exams, and long-term care -- which can cost hundreds or even thousands of dollars out-of-pocket.
One potential solution is to enroll in a Medicare Advantage plan. These plans are similar to the type of health insurance you likely receive through your employer, in that they're offered by third-party insurance companies. Many plans include coverage for vision and dental, as well as prescription drug coverage. Premiums vary widely based on your location and the plans offered in your area, but an Advantage plan is often more expensive month-to-month than original Medicare.
Long-term care is one of the most expensive healthcare costs you may face (it costs nearly $7,000 per month, on average, for a semi-private room in a nursing home), and it's typically not covered by Medicare. That means if you want to avoid being blindsided by massive medical bills, it's a good idea to prepare as much as you can before you retire.