Health care looms large in retirement planning: Key updates for advisors

September 4, 2025 3:41 PM

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Like it or not, health care is becoming a central part of retirement planning for financial advisors and their clients.

Rising medical costs make it critical to weigh coverage options — whether traditional Medicare, Medicare Advantage or self-insuring. Despite its limitations, many retirees are drawn to Medicare Advantage for its lower premiums and added benefits. But even that route is narrowing as some insurers drop unprofitable members.

The calculus is even more complicated for younger Americans, many of whom say they're afraid Medicare simply won't be there for them by the time they reach retirement.

And beyond basic coverage, there's the looming financial risk of long-term care. When combined with everyday medical needs, it can leave retirees managing a daunting mix of chronic and unexpected expenses. Here's what advisors need to know to help clients navigate the complex health care landscape.

Health care costs stack up in retirement

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Health care expenses continue to climb for retirees. A 65-year-old stepping into retirement this year should expect to spend about $172,500 on medical care throughout retirement, according to new data from Fidelity. Advisors warn that overlooking those costs can create major financial strain later in life.

Since Fidelity first began tracking retiree health care spending in 2002 — when the projected lifetime cost was just $80,000 — the estimate has more than doubled, consistently outpacing inflation.

READ MORE:

Retiree health care costs are climbing: What advisors need to know

Planning around a future without Medicare?

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Americans are growing more doubtful about Medicare's long-term future, yet few feel financially ready to shoulder health care costs on their own, according to a new survey from Retirable and eHealth. The poll of 1,111 adults nationwide found that among those not yet enrolled in Medicare, 4 in 5 worry the federal program won't be available to them when they retire.

That concern isn't unfounded. The latest report from the Social Security and Medicare Trustees warns that the Hospital Insurance Trust Fund could be depleted by 2033, triggering an 11% reduction in Medicare benefits.

READ MORE:

No more Medicare? Pessimistic clients look for advice

Rethinking Medicare Advantage for clients

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Enrollment in Medicare Advantage has ballooned over the past 20 years, but insurers are now pulling back. Rising costs and reduced government reimbursements have prompted many providers to prioritize profits over growth, leading to trimmed benefits and withdrawals from less profitable markets.

Experts caution that these shifts could pose serious challenges for retirees who depend on Medicare Advantage, also known as Medicare Part C, with ripple effects for advisors building retirement plans.

READ MORE:

As insurers axe Medicare plans, here's what advisors should know

Rising costs and declining satisfaction plague Medicare Advantage

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Medicare Advantage now covers a large share of Medicare beneficiaries, but skepticism about the privatized program remains. A new J.D. Power survey of nearly 11,000 members across the 10 largest states shows satisfaction varies widely by state and insurer, based on trust in the provider, plan options, how well coverage meets needs and ease of doing business.

Recent changes — including higher deductibles, increased out-of-pocket costs, shrinking networks and tougher prior authorization requirements — have lowered satisfaction, leaving many members confused and less confident in their plans.

READ MORE:

As satisfaction drops, is Medicare Advantage still worth it for clients?

WISH-ing for federal medical safety net for seniors

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Rising long-term care costs can derail even the most carefully planned retirements, but a new bipartisan proposal could ease the burden for many households, according to Morningstar research.

The Well-Being Insurance for Seniors to be at Home (WISH) Act would create a federal catastrophic insurance program covering long-term services and supports — including in-home care, assisted living and nursing home care.

READ MORE:

Bipartisan bill aims to soften the blow of long-term care costs