We’re in our 60s, retired, have $70,000 in savings and Social Security of about $3,780/month. But high health care costs eat into our budget — how can we survive at least 20 more years?

Health care spending is a huge burden on retirees

If you have a nest egg of $70,000, your savings will provide you with only around $2,800 in income per year. That's because you'll likely maintain a safe withdrawal rate to avoid emptying your accounts — and most experts say that means capping spending at around 4% of your account balance in year one and making annual adjustments for inflation.

When combined with your $3,780 per month Social Security benefit, you'll have around $48,160 per year in income from your savings and Social Security.

Unfortunately, data from the Federal Reserve reveal average expenditures on health care among those 65 and over total more than $8,000 per year.

Fidelity also found a 65-year-old retiring in 2024 needs around $165,000 saved to cover all of their out-of-pocket costs throughout retirement, while the Center for Retirement Research warns that only 75% of Social Security benefits remain after paying premiums and out-of-pocket costs for the median retiree.

All of these numbers paint a troubling picture given that you most likely can't easily afford to spend upwards of 15% of your income just on medical costs — depending on which estimate you use.

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How to cut costs and cover your medical care

The best way to preserve your nest egg is to do what you can to lower medical care costs so you can use your Social Security benefits and limited savings to pay for other necessities.

MedlinePlus suggests some of the following ways to do that:

• Shopping carefully for a Medicare Advantage or Medigap plan to reduce out-of-pocket costs associated with traditional Medicare. While you must pay premiums for these plans, it can be cheaper to buy them than to pay for all coinsurance costs and things Medicare doesn't cover.
• Asking your care provider to switch to generic medicines to keep costs down.
• Getting routine health care screenings and focusing on preventative care to prevent small health problems from turning into major health issues.
• Seeking charity care at non-profit hospitals.
• Looking into financial assistance programs that help seniors cover medical and food costs and arrange transportation to doctor visits.

If you are unable to reduce your costs, you can also look at ways to increase your retirement income or cut other spending. For example, you could work part-time to bring in extra income, downsize your home and invest any extra funds you get out of your equity, or move to an area with a lower cost of living so you have more money to devote to medical care.

By taking these steps, hopefully you can shore up your financial security and make retirement work financially for you — even despite the fact that you don't have a huge amount of savings to start with.