As you approach retirement one of the most pressing concerns that you will face is how to manage healthcare costs related to growing older, particularly those associated with medical aid. Medical aid premiums typically rise faster than inflation each year, and once your regular salary stops, those monthly payments can start to feel steep. Understanding how to effectively manage these costs can significantly impact your financial security and overall quality of life during retirement. So, how do you plan for it?

1. Build medical aid into your retirement plan

It’s easy to underestimate how much medical aid will impact your retirement income. Many retirees find that healthcare has become one of their largest monthly expenses; that’s why it’s crucial to factor these premiums into your retirement budget from the start. According to Stats SA, as of 2023, 15.7% of all individuals in South Africa were members of medical aid schemes.

If your retirement income comes from an annuity or pension fund, make sure your medical aid contributions are sustainable over the long term. A small increase each year may not seem like much now but compounded over 10 or 15 years, it can have a big impact on your cash flow.

2. Review what you’re paying for

An important question to ask is whether your current medical aid plan still meets your needs and aligns with your future income? If you’re on a comprehensive plan, but you make use mostly of network hospitals and don’t often claim chronic conditions, a more affordable hospital plan might suit you better in retirement. The key is to balance your level of cover with what you can comfortably afford without compromising on essential healthcare. As you would do with your retirement funds, adopt the same disciplined, diligent, evidence-based approach to your medical aid is that you need to understand the cost, evaluate the value, and make informed decisions that align with your long-term goals.

3. Choose wisely

Many medical aid schemes offer specific plans tailored for retirees, which may include benefits that cater to older members. While you’re looking around, you’ll need to consider your healthcare needs as you transition into retirement, taking into account the effects of aging and how this will impact the plan that you need. Through this lens, you can vet options that provide comprehensive cover for things like chronic conditions or anticipated health issues, while also considering affordability. As you evaluate the different plans, make sure that you take the time to thoroughly understand each plan and how you will be covered:

• Familiarise yourself with what is covered and what isn’t.
• Identify what your plan includes when it comes to hospital stays, specialist visits, and chronic medication.
• Review the specifics of your cover to help you avoid unexpected costs and make informed decisions about your healthcare.
• Check for preventative care services and if there are costs involved.

You can make use of online medical aid comparisons to help you select the best option for you in retirement.

4. Consider building up your savings

There are a number of medical aid schemes that provide savings components within their plans, allowing you to accumulate funds over time. This can be an effective way to manage out-of-pocket medical expenses during retirement. Some medical aids highlight the importance of building up these savings throughout your working life to reduce financial pressure during retirement. However, you could also start setting aside additional savings in a 10X Retirement Annuity and take advantage of tax benefits that can help boost your savings over time.

5. What else should you consider

Preventative care: Investing in preventative care is one of the most effective ways to manage long-term healthcare costs. As you get older, you will need to have regular check-ups, screenings, and vaccinations. These actions can help detect potential health issues early on when they are often easier and less expensive to treat. Most medical aid schemes cover preventative services at no additional cost, so you should really take advantage of these offerings to maintain your health and reduce future medical expenses.

Consider gap cover: Having gap cover is really important. Gap cover can pay any outstanding amount leftover after your medical aid has settled their portion of your healthcare costs. Gap cover doesn’t replace comprehensive medical aid, but it does provide you with additional financial protection to manage unexpected healthcare costs.

6. Remember: You only have one window a year to make changes

Medical aid providers generally allow for one plan change a year and this starts before the start of a new benefit cycle. If you miss that window, you’ll need to wait another year before adjusting your cover. Set a reminder to review your plan every year alongside your investment portfolio and retirement income strategy. A little forward planning can help you avoid paying for benefits you don’t use — or missing out on cover you do need.

7. Don’t wait until you retire

The best time to prepare for medical costs in retirement is while you’re still earning. By reviewing your plan early, you can make gradual adjustments, maintain continuous cover, and ensure that your post-retirement budget remains sustainable. Aligning your healthcare planning with your broader retirement strategy helps reduce financial stress later on and keeps you focused on living well, not worrying about monthly expenses.

Healthcare costs are a reality but with smart planning, they don’t have to derail your retirement. By including medical aid in your retirement projections, reviewing your plan annually, and making informed choices, you can protect both your health and your wealth.