Healthcare costs are often underestimated in retirement planning, especially for expats who might not be eligible for local medical benefits. Have you factored sufficient healthcare costs into your retirement plan?
Healthcare requirements in retirement
While a recent Cigna Global report indicates that 80% of expat retirees consider healthcare one of their largest expenses, a Mercer study reveals that only 30% of expats include long-term healthcare provisions in their retirement plans. This gap could leave many unprepared for significant costs later in life.
If you believe you will enjoy a long and healthy retirement without the need for healthcare, it’s time to remove those rose-tinted glasses! They say that old age is not for the faint-hearted, and the reality is that sooner or later, the vast majority of elderly people will require expensive medical care.
At a minimum, routine and preventative care – such as check-ups and vaccinations for flu, pneumonia, shingles, and Covid – will be necessary. Vision, hearing, and dental care inevitably deteriorate with age, and even without life-threatening conditions, good-quality glasses or hearing aids can greatly improve comfort as eyesight and hearing decline.
For many, wear and tear on the body leads to procedures like hip or knee replacements or heart surgery. Additionally, a significant number of retirees suffer from long-term conditions requiring ongoing care and treatment, such as diabetes, cardiovascular disease, osteoporosis or arthritis. Not to mention the increased prevalence of cancer, stroke, and heart disease in those over 70. Managing these conditions can be exceptionally costly.
Planning ahead for healthcare expenses in retirement is not just advisable – it is essential to ensuring a comfortable and secure future.
The rising cost of healthcare in retirement
Medical inflation is rising faster than ever and, in many countries, has outpaced general inflation in recent years. For expatriates, the challenge is even greater, as many may not have access to public healthcare while living abroad. This makes it essential to factor future medical costs into your financial plan.
Many people underestimate their future healthcare costs. Is it time for a reality check to ensure you’re financially prepared for the medical care you’ll need in retirement?
Strategies to incorporate healthcare into your retirement plan
Estimating long-term healthcare needs in retirement can be challenging since future health issues are unpredictable. However, these are some steps you can take now to incorporate healthcare into your retirement plan.
- Prioritise your health today
Prevention is always better than cure, and certainly cheaper! Your lifestyle choices in terms of diet, exercise, smoking and alcohol consumption will have a huge impact on future healthcare costs so start incorporating healthy practices into your life now.
- Research healthcare costs where you plan to retire
Healthcare costs vary dramatically by country. A UK retiree eligible for NHS care faces different expenses than a US citizen relying on private insurance. In some Asian countries, local medical facilities may be affordable but may not meet your expectations, whereas international hospitals with top-tier care can be costly. Understanding these differences will help you estimate future expenses more accurately.
- Secure comprehensive medical insurance early
There are two major advantages of taking private medical insurance now rather than waiting until you are older. Firstly, the younger and healthier you are, the cheaper your policy is likely to be. Secondly, by getting insured earlier, you lock in coverage before health issues arise. The older you get, the more likely you are to develop chronic health conditions, which could be excluded as pre-existing conditions.
- Set aside savings for your healthcare in retirement
Even with public healthcare access, out-of-pocket costs can add up. Unexpected medical needs – such as long-term care, specialist treatments, or costly medications – may not be fully covered by government schemes or standard insurance. To prepare, set aside savings specifically for healthcare, account for medical inflation, and ensure you can afford private insurance throughout retirement.
- Regularly review your healthcare plan as you age
Your healthcare needs will evolve over time, so it’s essential to reassess your plan periodically. The coverage and costs of healthcare systems may also change, requiring adjustments to your financial strategy. Make sure you review your insurance policies annually to ensure they still meet your needs, adjust your savings contributions if healthcare costs rise faster than expected, and monitor healthcare availability and affordability where you choose to retire.
***
Sadly, many expat retirees in Asia struggle to afford the medical care they need because they’ve made false assumptions about their healthcare eligibility, underestimated long-term care costs, or failed to regularly update their plans. Taking a proactive approach ensures your retirement plan stays aligned with your evolving healthcare needs.
As financial advisers, part of our job is to strengthen the financial wellbeing of our clients and deliver better outcomes in the future. We guide expats through the unique challenges they face and ensure healthcare costs are factored into your retirement plan, so you’re prepared for whatever lies ahead.
If you are worried that you’ve been overlooking healthcare costs in your retirement plan, now is the time to take action.
Contact us so that we can review your situation together and put provisions in place now to ensure that whatever health surprises life has in store for you, you’ll always be able to get the care and treatment that you need.
A leading provider of expat financial services and wealth management services across Asia.
