What Does 'Downsizing' Medical Care in Retirement Look Like?

By William G. Stuart | Originally posted on LinkedIn by Health Savings Academy

When you haven't saved adequately for retirement, you may have to compromise on your post-work lifestyle. But can you downsize medical care?

Two recent articles (see here and here) present a sobering reminder of the cost of retirement. It calculates that the average retiree spends between $4,400 and $5,000 monthly. To put this range in perspective, the average Social Security benefit in 2024 is less than $1,800 (though people who defer benefits to full retirement age or age 70 receive considerably more, which means that the half of all beneficiaries who claim before age 65 receive less).

That gap - roughly $2,500 to $5,000 per month for the average Social Security beneficiary with average retirement expenses - must be filled either by other sources of income (like a part-time job, retirement savings, a pension, personal savings, or sale of an asset like a primary residence, second home, or business) or a reduction in monthly expenses.

A growing number of retirees work part-time, which increases their income. But the other sources of retirement income listed above are typically fixed by the time someone reaches retirement. It's not likely, short of inheritance or lottery luck, that someone age 70 or 80 will suddenly increase her savings or pension, or purchase a property that increases dramatically in value.

Thus, for many retirees who come up short on income, the only option is to downsize retirement expectations and expenses. That's easier to do with some expenses than with others.

Downsizing the Other Three Major Budget Items

It's rarely easy, at any age, to fit one's lifestyle into the family income. Pre-retirees can always justify splurging (that shiny new vehicle, the trip to Disney, or the bigger house) by convincing themselves that the next raise or bonus is right around the corner. But in retirement, the desire - and sometimes the ability to work - is reduced. Facing a fixed income, many retirees must make choices to ensure that they live within their means. They have acceptable flexibility three of the four largest budget items:

Housing. Many seniors who need to downsize their housing budget have options. They may have access to senior housing or low-income housing in their communities. They may qualify for vouchers or other subsidies that reduce the portion of the rent for which they're responsible. They may have a child or friend with whom they can live. They may choose a 55+ community of mobile homes. Or they may simply downsize from the large home in which they raised a family to a smaller unit. What these options have in common: They're generally safe and dignified places to live.

Transportation. Couples can downsize to one car. Or trade a car with a payment to a lesser model that they can buy without borrowing. Or forego a car altogether in favor of the town's senior van, a nearby bus route, or ride-sharing services. They care forego air travel to vacation or see family. This loss - particularly seeing family as often as they'd like - may be difficult, but virtual connections reduces the pain.