The $100K Healthcare Gap: Are You Saving Enough?
Many retirees discover too late that their HSA and savings fall short of healthcare costs. This calculator shows the gap and how much more to save.
Ready to run the numbers?
Why: Healthcare is a major retirement expense. Knowing the gap between your HSA and projected costs helps you save enough.
How: We project your HSA balance at retirement (7% growth), estimate healthcare costs (from our calculator or your input), and calculate the gap and additional savings needed.
Run the calculator when you are ready.
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Your Information
Charts
HSA Balance vs Healthcare Costs Over Time
Gap Widening with Age
Coverage Sources
Gap by Retirement Age
For educational and informational purposes only. Verify with a qualified professional.
The retirement healthcare gap is the difference between your projected healthcare costs and what you have saved (e.g., in an HSA). Fidelity estimates a couple needs ~$315K for healthcare in retirement. HSAs grow tax-free at ~7%/yr when invested. If you retire before 65, you need gap coverage (COBRA, ACA, or employer retiree health). Closing the gap requires additional savings or better coverage.
Sources: Fidelity, CMS, IRS Publication 969.
Key Takeaways
- • The gap = projected healthcare costs minus HSA (or healthcare savings) at retirement
- • Retiring before 65 creates a pre-Medicare gap; COBRA or ACA can bridge it
- • HSA funds can pay Medicare premiums and qualified medical expenses tax-free
- • Use the Healthcare Cost calculator first to estimate your retirement healthcare needs
Did You Know?
How Does the Healthcare Gap Work?
HSA Projection
We project your HSA balance at retirement using 7% annual growth plus your contributions. HSAs are triple tax-advantaged.
Pre-65 vs 65+
If you retire before 65, you need ACA, COBRA, or employer coverage. At 65+, Medicare + supplements apply. Costs differ by phase.
Closing the Gap
Additional savings per year = gap ÷ years to retirement. Increase HSA contributions or invest more to close it.
Expert Tips
Pre-65 Coverage Options
| Option | Duration | Typical Cost |
|---|---|---|
| COBRA | 18–36 mo | $800–1,500/mo |
| ACA Marketplace | Until 65 | $500–2,000/mo |
| Employer Retiree | Until 65 | Varies |
Frequently Asked Questions
What is the retirement healthcare gap?
The gap is the difference between your projected healthcare costs in retirement and the amount you have saved (e.g., in an HSA) or covered by insurance. Closing the gap requires additional savings or coverage.
How much should I have in my HSA for retirement?
Fidelity estimates a couple needs ~$315K for healthcare in retirement. If you have an HSA, aim to grow it to cover a significant portion. Many advisors suggest $100K+ by retirement for healthcare.
What if I retire before 65?
If you retire before Medicare eligibility at 65, you need gap coverage: COBRA (typically 18 months), ACA marketplace plans, or employer retiree health. Costs can be $500-$2,000+/month depending on age and plan.
Does COBRA count toward Medicare?
COBRA provides temporary continuation of employer coverage. It does not extend beyond 18-36 months. You must enroll in Medicare at 65; COBRA typically ends when Medicare begins.
How does the HSA growth rate affect my balance?
HSAs can be invested. A 7% annual return is a common assumption. Over 20 years, $50K growing at 7% becomes ~$193K. Start early and invest for long-term growth.
What is the gap as a percentage of retirement savings?
If your total retirement savings is $1M and your healthcare gap is $100K, that's 10%. Knowing this helps you prioritize HSA contributions and healthcare-specific savings.
Key Statistics
Official Data Sources
⚠️ Disclaimer: This calculator is for educational purposes only. HSA growth (7%) and healthcare cost estimates are illustrative. Your actual returns and costs will vary. Consult a financial advisor and use official Medicare/ACA resources for personalized planning. Not financial advice.
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