Those added years can carry a significant price tag in the form of rising healthcare costs. Recent studies suggest healthcare can become a six-figure retirement expense, even for people who do “everything right.” Yet planning lags. A recent D.A. Davidson survey of U.S. adults found that while 8 in 10 are concerned about healthcare costs in retirement, fewer than half have taken steps to plan for them. Why the disconnect?

One reason many people postpone planning is a familiar refrain: “I’m healthy. I take care of myself.” In other words, optimism bias—the belief that “it won’t happen to me”—can quietly drive inaction.

Healthy habits matter, but they don’t eliminate cost exposure. The surprise for many retirees isn’t that healthcare expenses exist; it’s the magnitude of those expenses, and how quickly they can change after a diagnosis, procedure, or new medication. Longer lives mean savings must stretch further, and healthcare costs often rise faster than general inflation. That uncertainty makes the topic easy to defer. According to the D.A. Davidson survey, only 16% of respondents said they feel very knowledgeable about what healthcare may cost in retirement.

A second driver of procrastination is the assumption that “Medicare will cover it.” Medicare is an essential foundation, but it is not a complete solution, and it is not a cap on spending. Retirees can still face meaningful out-of-pocket costs, including:

• Premiums and cost sharing
• Dental, vision, and hearing expenses
• Certain prescription costs
• Long-term custodial care
• Network and out-of-area limitations, depending on plan design

For many pre-retirees who spent decades on employer-sponsored coverage, Medicare’s rules and tradeoffs are unfamiliar, making it easy to underestimate what retirement healthcare may actually cost.

Some studies estimate Medicare covers roughly two-thirds of total healthcare expenses, leaving the remainder to retirees.

Building a ‘Healthcare Expense Portfolio’

Because the path of future healthcare needs is uncertain, many retirees build what I call a “healthcare expense portfolio”: multiple resources that can work together rather than relying on a single approach. That may include savings, an HSA (if eligible), and supplemental coverage decisions, among other tools. In the D.A. Davidson survey, the most commonly cited strategies were Medicare Advantage or supplemental Medicare plans (47%), retirement accounts (35%), personal savings accounts (34%), long-term care insurance (17%), and HSAs (13%).

For some retirees, a continuing-care retirement community—with graduated levels of support—can be part of that portfolio. Three clients of mine, all widows, prioritized the peace of mind of knowing their care needs could be met if their health changes over time. In each case, they converted their home equity into the community’s buy-in. It was a meaningful lifestyle decision, but it provided structure, support, and a built-in social network.