Are Clients in Denial About Retirement Healthcare Costs? 

It’s natural to look away from things that worry us, but ignoring problems just makes them worse. 

That’s certainly the case for health care expenses in retirement. Out-of-pocket costs for an American couple who retired at age 65 in 2025 will average $345,000, up nearly 41% from the $245,000 estimate in 2015, according to Fidelity data. It’s a scary statistic for clients to hear, said Andrew Crowell, vice chairman of wealth management for D.A. Davidson & Co., and it’s causing many to stick their heads in the sand. Financial advisors need to dig them out, Crowell said, by reframing the conversion around proactive planning.

“It can be hard to cut through all the noise and get to these kinds of topics when your clients are probably more interested in talking about market volatility from the situation in the Middle East,” Crowell, whose firm recently commissioned a survey on the topic, told Advisor Upside. “It’s vital that we do so, however. Healthcare is one of the most significant and yet still underestimated expenses that most retirees will face.”

New Survey Findings 

Nearly eight in 10 (78%) Americans say they are concerned about the impact of rising healthcare costs on their retirement satisfaction, per the D.A. Davidson’s survey. The rest of the results are just as telling:

• Fewer than half (48%) of respondents have factored these increasing costs into retirement planning. 
• Just 16% say they feel very knowledgeable about expected healthcare costs in retirement. 

“Healthcare inflation typically runs at least twice the rate of overall inflation,” Crowell observed. “Frankly, people are in denial about this, even though about six in 10 say they’ve already witnessed someone in their life struggle with healthcare costs in retirement. They just think it’s something they’ll deal with later, when the reality is that they need to be planning for it right now.”

Taking Action. Though admittedly expensive, attaining some degree of long-term care coverage makes sense for affluent clients who expect to rely on a combination of Medicare and private insurance in retirement. “The key is threading the needle and getting coverage at a good rate while you’re still insurable, while not starting to pay premiums too early,” Crowell said. “We had one client couple recently who had decided to wait until their late 60s to seek out coverage, and they couldn’t get any. It’s a conversation for your 50s and early 60s, not your late 60s or 70s.” 

Other strategies include long-term investing in health savings accounts, cutting back on discretionary spending to direct more money into 401(k)s, pursuing preventative care and embracing healthy lifestyle choices. Discussing care plans with family is also crucial. 

“There’s no silver bullet for solving the retiree health care question, but the good news is that we have a lot of tools at our disposal,” Crowell said. “Being prepared for rising healthcare costs is important, but being informed is the first, most crucial, step.”