Gone are the days you could enter the retirement years with little or no planning.

Many factors have led to the complexity of modern retirement planning, such as the extended life span of the average American (77.8 in 2020, up from 70.2 in 1965), the advent of 401Ks vs. pensions, rising health care and long-term care costs, geographic mobility of family members (you may want to relocate to be closer to children/grandchildren) and the list goes on. Along with choosing when exactly to retire (leave the workforce all together or work part-time for a period), you will need to decide when you will begin to draw Social Security, how to live on a fixed — possibly smaller — income, where you will spend your retirement years, etc. Most of these decisions will be affected by the resources you have set aside for this phase of life.

Some retirement costs are easier to determine than others. One of the more difficult costs to plan for is that of health care. Many are under the impression that Medicare will cover the bulk of their health care costs from age 65 and beyond, but typically that is not the case.

A recent study by Fidelity found that a 65-year-old couple retiring in 2020 will pay an average of $295,000 in health care costs over the remainder of their lifetime. It is estimated that the average 65-year-old couple will spend $11,400 on health care in their first year of retirement and $5,700 per year each following year on premiums and out-of-pocket costs.

Approximately 40 percent of retirement health care costs are attributed to Medicare premiums, another 40 percent is for Medicare co-payments & deductibles and the final 20 percent going to OOPs (costs not covered by plans).

Breaking it down into monthly costs may help make it seem more real and easier to budget for. What follows is 2020 pricing and is per person. Medicare Part A (hospitalization coverage) is free for most people. Part B (doctor’s visits/outpatient services) costs $148.50 per month — more for those with higher earnings. Part D (prescription drug coverage) costs $32 per month on average. But remember there are still OOPs (deductibles, co-payments and possible uncovered services/prescriptions) with all of these plans.

To help avoid some of these OOPs you can buy a Medigap supplement policy. Another option is to purchase medical and drug coverage from a private insurer through a Medicare Advantage plan. This will result in lower premiums but limit you to a network of providers and hospitals and include more OOPs. You have from Oct. 15 to Dec. 7 to choose a Part D or Medicare Advantage plan for the next calendar year. It’s best to re-evaluate your best option for coverage every year, plans change as do your health care needs. You can contact SHIIP with any Medicare questions at 712-722-8309.

You can be storing up health care spending reserves while you are still working via a Health Savings Account associated with an HSA-eligible health insurance policy. Contribution levels depend on age and single/family coverage. This is a pretax account that can be used, tax free, for future health care costs including Medicare premiums and OOPs. Often your employer will contribute to your HSA account annually as part of your health care benefit plan. You will need to stop contributing to your HSA six months before signing up for Medicare.

Not included in any of these cost discussions is the possible need for long-term care. According to the U.S. Department of Health & Human Services, a person turning 65 today has an almost 70 percent chance of needing long-term care. Annual long-term care costs in 2020 have been estimated at $105,000 for residential care or $50,000 for 44 hours per week of in-home care. Medicare rarely covers any of these expenses and Medicaid coverage is only available once almost all of your assets have been spent. long-term care policies are a good way to plan for these costs and there are some hybrid policies that pay a death benefit to your beneficiary for unused coverage.

While this topic is not particularly straightforward and the financial costs can be scary, choosing to educate yourself on the topic and doing some planning will go a long way toward a better outcome and peace of mind.

Kelli Jelsma of Sioux Center is a certified voluntary long-term care ombudsman for the state of Iowa in Sioux County.