But, it turns out that housing and transportation costs are likely to be greater costs than healthcare over your retirement years. What's different about these costs is that we don't think of them as unpredictable. Generally, rents/mortgages and automobile costs are expenses that we have managed for years and years before retirement. They are not likely to unexpectedly change (upwards) forcing us to make a dramatic withdrawal from our savings.
Just because healthcare may not be our biggest expense in retirement doesn't mean you shouldn't prepare for healthcare costs. Health insurance premiums are something we understand as predictable. While they are likely to continue increasing faster than inflation, we can project a rate of increase with reasonable expectations. Same with co-pays, co-insurance, and deductibles.
With these expenses identified, we are left to consider the most obvious unpredictable expense, long term care. These expenses are not generally covered under health insurance plans. These can impose a financial burden for ourselves and our families if they persist over the long term, like the rest of our life. I bring attention to this for one important reason. We can take the time to factor these type of expenses in our planning and therefore consider how these expenses could be managed. I do this as part of my financial planning for clients. We should all spend some time and effort planning for this. Why not address this biggest of concerns in retirement.