Preparation is key for retirees and those approaching retirement. The good news: a large share of Americans are saving at levels recommended by financial experts, with an assist from recent gains in the stock market. The calculators say they are set.
But there’s something that’s nagging them.
Millions of retirees worry their nest egg might not cover a surprise healthcare shock.
Healthcare is a rapidly accelerating expense. According to a study from KFF, in 2023, national health spending jumped 7.5 percent, which represents about $14,500 per person. Another study from the Centers for Medicare & Medicaid Services shows that private insurance spending alone rose 11.5 percent.
Americans are growing more uncertain about retiring comfortably, with inflation cited as a key concern. In a new Schwab survey of retirement plan participants, only 34 percent said they are “very likely” to reach their savings goals, down from 43 percent in 2024.
These headlines are triggering that doubt in the pit of your stomach, and that’s a powerful trend to factor into retirement.
Currently, ACA marketplace subsidies are helping to prop up premiums. Thanks to enhancements from the ARP and Inflation Reduction Act, another KFF study shows that enrollees saved an average of $705–800 annually, reducing net premiums by roughly 44 percent.
But those subsidies are set to expire at the end of 2025. Without them, those same experts at KFF predict premium costs could rise by 75 percent on average, and even possibly double in some states. A Washington Post analysis shows a median proposed hike of 15 percent, with over a quarter of insurers requesting increases of 20 percent or more.
That’s serious sticker shock on the horizon. And it doesn’t seem to be a theoretical risk. Without subsidy renewal, millions could lose coverage, and those remaining will pay more.
Everyone’s situation is different, but I’ve started conversations with my clients by asking them if their plan is adaptable to accommodate a 75 percent rise in healthcare costs or a significant premium hike.
It’s a worst-case scenario, but that’s precisely why we stress-test the projections. We’re modeling for higher healthcare inflation while also taking a strategic look at funding sources that offer consistent income and diversification when it matters most.
In retirement, consistent income is critical, especially when you’re no longer drawing a paycheck. That’s why it’s important to review income-generating investments beyond traditional stocks and bonds regularly. These alternative sources can provide steady, non-correlated cash flow to help offset unpredictable expenses like healthcare premiums. Keeping them aligned with your needs ensures long-term flexibility and financial stability.
You don’t have to guess what healthcare will cost five or ten years from now. But you do need to build a retirement strategy that doesn’t collapse when the numbers change. That starts with having more than just market exposure; it means building durable, purpose-driven income streams that help you stay in control.
Are you ready to build that? Let’s chat.