Healthcare Costs in Retirement: Comparing NY, NC, and FL

Disability and Healthcare Planning | by Jules Buxbaum | Tuesday, January 14, 2025

Are you wondering how to handle the retirement healthcare costs that often surprise even the most prepared retirees? These expenses can vary widely, especially when comparing high-cost states like New York to more moderate-cost locations such as North Carolina and Florida.

Many individuals examine options like Medicare and supplemental insurance but still find it tough to project overall retirement medical expenses. If you’re curious about Medicaid options in these three states, those details can also play a role in your planning. Let’s explore the factors that drive healthcare expenses in each state and what it means for your future plans.

The Importance of Budgeting for Retirement Healthcare

Healthcare spending in the United States recently reached nearly $4.9 trillion, a figure that has been climbing quicker than general inflation. According to Fidelity, a 65-year-old couple retiring in 2023 may need about $315,000 saved (after tax) to pay for medical costs throughout retirement1.

This projection might feel daunting, but planning ahead can help you handle Medicare premiums, long-term care, and out-of-pocket expenses. Older adults often face larger bills for prescription medications and long-term care—ranging from in-home assistance to extended nursing home stays.

Comparing Healthcare Expenses in NY, NC, and FL

Each state offers unique advantages, but also has its own price points, insurance options, and levels of access to high-quality care. Below is a closer look at how these three states stack up.

New York

New York typically has higher healthcare premiums and medical expenses. In 2023, the average Medicare Advantage premium stood at about $27.42, which is notably above Florida’s rate2. Nursing home prices can also be substantial, with a private room averaging $155,125 per year3. This higher cost partly reflects New York’s advanced medical facilities, which often rank among the best in the country.

While the quality of care is top-tier, retirees should be ready for increased out-of-pocket costs. Although the state does not tax Social Security, it does tax certain retirement income. That can leave some residents wondering if relocating to a lower-tax state is worth the effort.

North Carolina

North Carolina strikes a balance between affordability and accessibility. In 2023, the average Medicare Advantage premium was about $11.82—less than half of New York’s average4. Long-term care is also relatively cost-effective: a private room in a nursing home runs around $100,375 per year3.

The state taxes some retirement income, but residents still find life more budget-friendly than New York. Many retirees enjoy the four-season climate and noted healthcare facilities in the Research Triangle area. However, some rural zones face healthcare shortages, which can influence ongoing medical management.

Florida

Florida is often seen as a retiree haven, partly because of the lack of state income tax. In addition, the average Medicare Advantage premium was just $4.33 in 2023, the lowest among the three states2.

Long-term care costs are higher than North Carolina but lower than New York, at about $116,800 annually for a private nursing home room3. While Florida’s year-round warmth appeals to seniors, residents should stay mindful of hurricane risks, which may drive up homeowners’ insurance and indirectly affect overall living costs.

Additional Factors That Affect Retirement Costs

When calculating medical expenses, it’s not just about insurance premiums or monthly out-of-pocket bills. Prescription drug coverage, long-term care needs, and any gaps in Medicare coverage all influence your finances.

Some retirees turn to Medigap policies for extra peace of mind. Others look into dedicated insurance for in-home care or assisted living. If you’re deciding on long-term care coverage, comparing local facility prices is a crucial step. For more insights, you might explore our perspective on long-term care insurance and how it fits various budgets.

The Fallacy of Age-Based Glide Paths

Conventional wisdom suggests adopting a risk-averse portfolio as you grow older. Many professionals assume you should gradually move away from equities and into bonds or cash equivalents with each passing year.

Yet, as 2Pi Financial’s research points out, this approach isn’t always ideal. A more accurate determinant is the ratio of future earning power to current wealth, rather than just age. Younger individuals often have decades of potential earning capacity, allowing them to absorb short-term fluctuations in equity markets. But an older person might still have high earning potential—especially if they plan to work part-time—so automatically shying away from equities could reduce long-term growth.

Additionally, academic findings on historical equity risk premiums indicate strong equity performance over many decades. While no one can predict the future, the persistent outperformance of stocks suggests that a blanket reduction in risk for all older adults may not be wise.

Using Tools for Better Planning

Practical financial tools can save you from guesswork when planning for medical expenses. A direct way to gauge whether you’re saving enough or investing suitably is by experimenting with digital advisors.

One option is the Two Pi Financial Planner, which shows how even a small tweak to your retirement timeline or savings rate can shift the probability that your income lasts. This engine takes inflation, market conditions, and your personal risk tolerance into account. The result is a customized plan that factors in unpredictable charges—like an unexpected hospital stay or rising prescription costs.

Key Takeaway

Budgeting for healthcare means crafting a plan that accounts for state-specific rules, long-term care possibilities, and your personal risk tolerance. Whether you live in higher-cost New York or more moderate North Carolina, overlooking medical expenses could lead to financial stress if big bills emerge in your later years.

Florida’s tax benefits and affordable Medicare premiums remain enticing, but it’s essential to consider every factor—from housing costs to access to specialized medical services. For a broader look at financial considerations, take a look at our guide on state-specific tax benefits for retirees in NY, NC, and FL. By taking a thoughtful approach now, you can protect yourself from financial shocks and feel more confident in your retirement years.

References

1. Fidelity Investments. (2023). “2023 Retiree Health Care Cost Estimate.” Available at: https://newsroom.fidelity.com/pressreleases/fidelity--releases-2023-retiree-health-care-cost-estimate--for-the-first-time-in-nearly-a-decade--re(https://newsroom.fidelity.com/pressreleases/fidelity--releases-2023-retiree-health-care-cost-estimate--for-the-first-time-in-nearly-a-decade--re)

2. MedicareAdvantage.com. (2023). “Average Cost of Medicare by State.” Available at: https://www.medicareadvantage.com/costs/average-cost-of-medicare-by-state(https://www.medicareadvantage.com/costs/average-cost-of-medicare-by-state)

3. Genworth. (2023). “Cost of Care Survey.” Available at: https://www.carescout.com/cost-of-care(https://www.carescout.com/cost-of-care)

4. Medigap.com. (2023). “Medicare Cost in Every State.” Available at: https://www.medigap.com/faqs/medicare-cost-every-state/(https://www.medigap.com/faqs/medicare-cost-every-state/)