How to Build a Retirement Health Care Budget

The most accurate and reliable way to determine your spending needs in retirement is to sit downand make up a budget projecting costs in the areas of housing, utilities, food, transportation, leisure activities and so on.

Depending on how your life will change (or not) after retirement, you can base these projections on the amounts you currently spend. If you don’t plan to move, for example, your housing and utility costs will remain the same. If you plan to travel, your leisure costs will go up. This pre‑retirement math exercise is not difficult. It just involves making lifestyle choices.

What is difficult for many people is figuring out the health care part of the budget. While you are working and covered by employer insurance, your health care costs are relatively easy to discern. You know how much your insurance premium contribution is (if any). You understand deductibles, co‑payments, and coinsurance amounts, and you can see, based on the prior health care needs of you and your family, how much you have traditionally spent on these items.