How to save $850,000 in Retirement Costs

I have a degree in personal finance and retirement planning and worked in the industry for several years before going down the path to starting AWAKN and becoming a health and fitness coach. 

So naturally, the financial planner in me takes a long term planning approach to everything, especially retirement, which is the pot of gold at the end of the rainbow for most folks.

In my health coaching business, I’ve asked the question, why don’t we take the same planning approach to our health in retirement as we do with our money? 

Well if your retirement money is important to you then you should read on because your metabolic health could set you up to make the most of what you’re saving for. 

One of the biggest variable expenses when planning for retirement is out of pocket healthcare costs.

In a 2018 study done by Vanguard and Mercer health, they estimate that annual out of pocket health care costs in retirement can range from $3,300 (low risk) to $21,000 (high risk).

What’s Low and High Risk?

Low risk = no chronic health conditions

Medium risk = 1 - 2 chronic health conditions

High risk = 2 or more chronic health conditions

What are chronic health conditions? 

(most, if not all of these are preventable)

  • Hypertension 
  • Hyperlipidemia (high cholesterol) 
  • Rheumatoid arthritis, osteoarthritis 
  • Heart disease 
  • Diabetes 
  • Chronic kidney disease 
  • Depression 
  • Alzheimer’s disease, senile dementia, and related disorders 
  • Chronic obstructive pulmonary disease 
  • Cancer 
  • Asthma 
  • Osteoporosis

What’s the current state of chronic health conditions of older adults in the U.S.?

  • 80% of older adults have at least 1 chronic disease
  • 77% of older adults have at least 2 chronic diseases

As you can see, poor metabolic health is starting to look expensive for most folks.

For some nerdy fun, I did a really simple and basic retirement calculation for a low risk vs. high-risk millennial planning for retirement.

Assume two 35 year old’s want to retire at 67 and they have a life expectancy of 90. One is low risk and one is high risk. They make $80k per year and expect that to increase 2% annually until retirement. 

They anticipate their monthly income needed at retirement to be 70% of their current income, excluding variable health expenses. 

Using the Vanguard / Mercer estimates for low and high risk, how much money does each person need at retirement to meet their income and variable health cost needs?

If you are a low-risk person you would need an incremental $275 per month for variable health expenses along with 70% of your current income. Therefore, you would need $2.18M at retirement to meet your monthly income needs.

If you are the high-risk person you would need an incremental $1,750 per month for variable health expenses along with 70% of your current income. Therefore, this person would need $3.03M at retirement to meet income needs.

That’s a delta of $850,000!!!!

I don’t know about you but it appears you can reap some pretty incredible cost savings in retirement by making some simple lifestyle changes today.

Plus you also get a bonus! You would feel good and be able to live the retirement life you imagine, which I am sure is not spending the majority of your time in a retirement home or hospital.

Speaking of hospitals. One more fun fact for you. Every 11 seconds, an older adult is treated in the emergency room for a fall; every 19 minutes, an older adult dies from a fall. The annual direct and indirect cost of fall injuries is expected to reach $67.7 billion this year.

One of the top preventative measures for falls is maintaining and improving physical health. Strength, agility, and mobility come to mind.

Do you want to save $850k dollars? Have you thought about retirement planning for your body?

Visit us over at AWAKN HEALTH to learn more about developing a long term plan for healthy aging.

Disclaimer: This was a simple calculation to make a point and share an opportunity, there are many variables in retirement planning, including your current age.


Current age: 35

Retirement age: 67

Life Expectancy: 90 

Current Income: $80k

Monthly Income needed at retirement: 70% of the current ($3,450)

Inflation rate: 3%

Annual income increase: 2%

Rate of return before retirement: 5%

Rate of return during retirement: 5%

Incremental OOP medical low risk = $3,450 + $275 = $3,725

Incremental OOP medical high risk = $3,450 + $1,750 = $5,200

Need at retirement (low risk): $2.18M

Need at retirement (high risk): $3.03M

Delta: $850k


Planning for health care costs in retirement

Facts About Healthy Aging

Plan for Rising Health Care Costs in Your Retirement

Retirement Calculator | How much do you need to retire?

Healthy Aging

Falls Free® Initiative | Dedicated to Preventing Fall Injuries | NCOA

The Growing Cost of Aging in America, Part 3: Sources of Care