In addition to total annual health care spending, retirees may experience health care “shocks” and end-of-life expenses. 

• Health care shocks are an increase in out-of-pocket expenses over a two-year period.
• End-of-life spending is the amount spent over the last two years of life at the age of death.

Understanding what these expenses look like can help with planning. Typical expenses occur at the 50th percentile where half of retirees will pay less than $2,000 in health care "shocks" and $3,400 in end-of-life expenses. Only 10% of retirees are at the extreme and will pay more than $5,000 in health care "shocks" and $85,200 in end-of-life expenses.

• Evaluate retiree health care funding vehicles. When it comes to planning and paying for retirement health care expenses, investors have multiple options to complement insurance coverage and help manage ongoing costs, including pretax accounts, Roth accounts, and health savings accounts.
• Account for Medicare. Medicare will be a key cost input so it's important to know the Medicare deadlines, understand the different Medicare coverage options, and incorporate Medicare choice into the planning process for your clients.
• Implement insights. Incorporate retirement health care costs and the nuances of retirement spending into the planning process, understanding that overall spending declines over the course of retirement when adjusted for inflation.