‘Listen up’: Suze Orman says Americans are miscalculating 1 critical retirement cost — are you? 5 ways to get ahead now

Rebecca Holland

Sun, September 6, 2026 at 2:45 PM GMT+3 10 min read

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For millions of Americans, turning 65 brings a major change in how they pay for health care: Medicare eligibility.

But financial expert Suze Orman says there's a potentially costly misconception about what happens next.

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Medicare doesn't make health care free — and failing to account for what it won't pay for could leave retirees facing substantial bills they never worked into their budgets.

"Clearly, that's a retirement expense you need to plan for," Orman wrote in a blog post about health care costs. And her warning isn't only for current retirees (1).

"Even if you have yet to enroll in Medicare, I need you to listen up."

With Fidelity estimating that a 65-year-old retiring in 2026 could need about $185,500 in after-tax savings to cover health care expenses throughout retirement (2), understanding where Medicare coverage ends could be an important part of making sure your savings last.

Medicare can still leave you with major bills

Medicare covers a substantial portion of health care expenses for Americans 65 and older, but retirees can still be responsible for premiums, deductibles, coinsurance and services that aren't covered.

"Health care is the most unpredictable expense because Medicare doesn't cover everything," certified financial planner Tyler End told AARP. "Out-of-pocket costs, deductibles, prescription drugs and the potential need for long-term care add up" (3).

Consider a hospital visit.

Medicare Part A, which covers inpatient hospital care, is generally premium-free for people who qualify. But in 2026, patients face a $1,736 deductible for each inpatient benefit period (4).

And hospital care itself can be expensive. The average cost of a day in a U.S. hospital was $3,297 in 2024, according to KFF (5).

The risk of needing that care also rises with age. CDC data shows that in 2019, 16.9% of Americans ages 65 to 74 had at least one hospital stay during the year. Among those 85 and older, that climbed to 26.1% (6).

Hospital bills aren't the only potential hole in a retirement health care budget.

Original Medicare generally doesn't cover routine dental care, eye exams for prescription glasses or hearing aids. And one potentially enormous expense — long-term care — generally isn't covered when custodial care is the only care you need.

That helps explain why Orman recommends that people who choose Original Medicare consider additional coverage.

"Anyone with Original Medicare should also have a robust Medigap policy," she wrote. "It will cover that 20% you are on the hook for" (7).

Medigap policies can help cover certain out-of-pocket costs left by Original Medicare, although they come with premiums of their own.

For Americans still years away from Medicare, Orman argues that knowing about these costs now provides something retirees don't have: time.

"I sure hope those of you who are not yet 65 pay close attention, too," she wrote.

"Understanding all the costs Medicare requires enrollees to cover out-of-pocket can be an eye-opener that can motivate you to save up more in your retirement accounts, calibrate your spending, or even consider post-retirement opportunities to earn some income."

That doesn't mean you simply have to accept the possibility of spending nearly $200,000 on health care throughout retirement. Building dedicated savings, understanding your Medicare options and preparing for expenses Medicare may not cover can give you more ways to protect your retirement finances before those bills arrive.

Smart strategies to reduce health care costs in retirement

While the numbers may seem daunting, there are steps you can take to reduce health care costs in retirement. Here are a few strategies for you to plan for your golden years.

1. Build a health savings account (HSA) before you retire

If you're still working and enrolled in a high-deductible health plan, an HSA offers three tax advantages: tax-deductible contributions, tax-free growth and tax-free withdrawals for qualified medical expenses. Unused funds roll over and can be a powerful tool to offset medical costs in retirement.

Original Medicare doesn't cover every health care expense, which can leave retirees responsible for costs such as coinsurance and portions of certain deductibles. A Medicare Supplement Insurance, or Medigap, plan can help fill some of those gaps.

⁠HealthCare.com makes it easier to shop for coverage by connecting you with Medicare plan options available in your area. More than 5 million customers have used HealthCare.com to help find health insurance coverage.

Simply enter your ZIP code to explore available options. If you need help comparing coverage and prices, you can speak with a licensed insurance agent who can answer your questions and help you find a plan that fits your needs and budget.

Once you've chosen your coverage, ⁠HealthCare.com lets you enroll the way you want — online or over the phone, so you can complete the process however you prefer.

2. Set up a dedicated health emergency fund

Beyond general savings, consider setting aside a separate fund just for health care needs. This keeps you disciplined while helping to avoid drawing down your retirement accounts too fast when significant expenses arise. The last thing you want to do is initiate a hardship withdrawal by pulling money out of your retirement accounts, like a 401(k), to cover a surprise medical emergency.

When building out your emergency fund, make sure to look for a combination of high-yield rates and liquidity so you can access your cash when you need it.

A high-yield account like a Wealthfront Cash Account can be a great place to grow your uninvested cash, offering both competitive interest rates and easy access to your money when you need it.

A Wealthfront Cash Account currently offers a base APY of 3.30% through program banks, and new clients can get an extra 0.75% boost during their first three months on up to $150,000 for a total variable APY of 4.05%.

That's 10 times the national deposit savings rate, according to the FDIC's July report.

Additionally, Wealthfront is offering new clients who enable direct deposit ($1,000/mo minimum) to their Cash Account and open and fund a new investment account an additional 0.25% APY increase with no expiration date or balance limit, meaning your APY could be as high as 4.30%.

With no minimum balances or account fees, as well as 24/7 withdrawals and free domestic wire transfers, your funds remain accessible at all times. Plus, you get access to up to $8M FDIC Insurance eligibility through program banks.

Even if you don't end up needing your emergency fund for healthcare, it can still help you out in other ways. For example, if the market's down as you approach retirement you could lean on your fund to delay drawing down from your retirement accounts and catch a potential rebound. In a pinch, your emergency fund can also cover an unexpected job loss.

3. Consider long-term care insurance

Fidelity's health care cost estimate excludes long-term care, which can cost upwards of $100,000 annually in some states (8). Purchasing long-term care insurance early can protect your retirement nest egg from these steep costs.

Long-term care insurance offers coverage for the costs of in-home assistance, nursing homes or assisted living facilities.

Without proper planning, paying for this kind of care could deplete your retirement fund. In many cases, the burden of paying for care often then falls on family members — potentially straining their finances.

GoldenCare offers different options based on your needs, including hybrid life or annuity with long-term care benefits, short-term care, extended care, home health care, assisted living and traditional long-term care insurance.

With GoldenCare, you can even combine life insurance policies with a long-term care insurance policy to give both you and your family peace of mind. Ideally, this can help further reduce risk beyond covering the Medicare gap.

4. Make sure you understand your Medicare options

Insurance can help protect you against major long-term care expenses, but there are also plenty of smaller health care costs that can add up throughout retirement.

As you get closer to retirement, every dollar starts to matter more. Rising health care costs, uncertain markets and fixed incomes can make it harder to stretch your savings — especially if you're trying to plan for decades ahead.

You might want to consider joining senior-focused organizations like ⁠AARP for discounts on almost everything — from prescriptions and dental plans to travel, entertainment and insurance.

As one of the most trusted organizations for older Americans, AARP not only offers money-saving perks, but they can also help you make informed financial and health decisions.

AARP members get access to guides that can help you ⁠make the most of Social Security, choose the right Medicare plan and uncover other government benefits — potentially saving you thousands.

5. Reduce your income to lower Medicare premiums

Premiums for Medicare Part B are based on your modified adjusted gross income (MAGI). If you're nearing retirement, consult a financial planner about reducing MAGI through Roth conversions, charitable giving or other tax strategies to avoid premium surcharges. They may also be able to help you take advantage of any additional deductions that were packaged with the One Big Beautiful Bill Act.

This can be especially important if you've been saving diligently in the lead up to retirement.

A financial advisor can help crunch the numbers and build a plan that works.

But hiring an advisor can be a lifelong commitment, which might make or break your retirement. That's why finding reliable advisors is crucial.

That's where Advisor.com can come in. The platform connects you with an expert near you for free.

Advisor.com does the heavy lifting for you, vetting advisors based on track record, client ratios and regulatory background. Plus, their network comprises fiduciaries, who are legally required to act in your best interests.

Just enter a few details about your finances and goals, and Advisor.com's AI-powered matching tool will connect you with a qualified expert best suited for your needs based on your unique financial goals and preferences.

Finding the right advisor isn't always easy — there's no one-size-fits-all solution. That's why Advisor.com lets you set up a free initial consultation, with no obligation to hire, to see if they're the right fit for you.

Once you've got the right financial advisor in your corner, the next step is getting a clear picture of where your money's actually going. That starts with the basics — budgeting and tracking your spending.