Suze Orman says many retirees underestimate 1 critical cost. What it is, and what you can do to prepare for it (2025)

Emma Caplan-Fisher

Sun, Apr 27, 2025, 6:30 AM 5 min read

For many retirees, budgeting becomes an art of precision — cutting travel, downsizing homes and seeking out seniors' discounts.

But there’s one expense that still manages to take a surprising toll, even for those who think they’ve planned their golden years well.

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Financial expert Suze Orman has warned that many Americans underestimate a critical cost in retirement, with one particular health-related expense she says is often overlooked.

Enjoying retirement stress-free may be a matter of understanding and mitigating this critical expense as soon as possible.

The true cost of health care

That crucial retirement expense, according to Orman, is health care — more specifically, the often misunderstood and underestimated costs of Medicare.

Most Americans assume that Medicare will cover most, if not all of their medical needs after retirement. But Orman cautions that this is a dangerous belief.

While Medicare Part A (hospital insurance) is generally premium-free, the 2025 inpatient hospital deductible is $1,676 per stay (up from $1,632 last year) — just one example of unexpected out-of-pocket costs.

Plus, Original Medicare (Parts A and B) doesn’t cover essentials such as dental, vision and hearing. Orman’s key advice is to get a solid Medigap policy to fill these gaps.

“Anyone with Original Medicare should also have a robust Medigap policy,” Orman wrote in a blog post in December 2024. “It will cover that 20% you are on the hook for.”

While Medigap plans do require paying more in monthly premiums, Orman believes the tradeoff is worth it to protect against large, unpredictable medical bills. These policies help with costs like coinsurance, copayments, deductibles and additional hospital and health care expenses.

According to Fidelity Investments, the average retired couple will need about $330,000 to cover health care costs after age 65, a steep figure underscoring Orman’s warning that Medicare doesn’t mean free.

Moreover, it doesn’t include expenses like over-the-counter medications and long-term care.

"I sure hope those of you who are not yet 65 pay close attention, too," Orman wrote in her blog post. "Understanding all the costs Medicare requires enrollees to cover out-of-pocket can be an eye-opener that can motivate you to save up more in your retirement accounts, calibrate your spending or even consider post-retirement opportunities to earn some income."