Financial Health in Retirement: Why It Still Matters After 65

Financial health refers to one’s overall financial well-being and their ability to meet current and future financial liabilities without excessive stress. It includes having a stable income, manageable debt, sufficient savings, and access to resources that allow someone to handle unexpected expenses without jeopardizing long-term stability or essential needs.

Unfortunately, many people these days assume it only involves having enough savings when they stop working. In reality, financial health is an ongoing process that requires continuous management throughout retirement. Let’s look at five main reasons why financial health is essential during retirement.

Longer Life Expectancy

Longer life expectancy refers to the trend of people living more years than previous generations. Many individuals now reach their late eighties or nineties, meaning retirement often lasts 20 to 30 years instead of just 10 or 15. This shift requires stronger financial planning because savings must support a much longer period of daily living.

A longer lifespan also exposes retirees to more financial risks over time. Costs usually rise, markets can fluctuate, and unexpected health needs may occur. These challenges accumulate over many years, making financial health even more critical. A steady income structure helps maintain security and allows retirees to continue their usual routines without stress.

Greater Need for Flexibility

Flexibility means being able to adjust spending, savings, and financial plans as new situations or unexpected costs arise, a crucial skill for retirees, who still face shifting expenses and sudden financial demands. In fact, they're more susceptible to sudden expenses related to health, housing, or family needs as they age due to limited income growth.

Retirees often need backup options when unexpected bills disrupt their monthly budgets. Strong credit can provide one of those options, especially when savings are already allocated for long-term needs. One example of financial flexibility is to borrow with a 800 credit score. This score means retirees are unlikely to face rejection when applying for new credit, cover unexpected bills, or qualify for rental housing.

Rising Healthcare Costs

One critical reason financial flexibility matters is medical inflation, which hits retirees harder. Recent data shows that a typical 65-year-old retiring in 2025 may spend about US$172,500 on medical costs during retirement. That amount is about 760% of the average annual Social Security benefit, far exceeding the income many retirees receive each year.

Financial health becomes especially important for retirees facing these cost increases, as they often depend on fixed-income sources that do not rise as quickly as healthcare expenses. It also reduces the likelihood of delaying treatment due to cost, which supports better overall health and stability throughout retirement.

Ensuring Access to Long-Term Care Options

Long-term care remains one of the most expensive retirement-related costs. In the United States, a private room in a nursing home now averages more than US$100,000 per year, while assisted living typically costs US$60,000 to US$75,000 per year.  In-home care is similarly expensive, averaging US$68,000 to US$73,000 per year, depending on the number of weekly support hours. 

These rising costs highlight the need for retirees to prepare well in advance for long-term care. Many individuals underestimate how quickly care expenses can accumulate, especially when they extend over several years. Planning early through savings, insurance, and realistic budgeting helps ensure that retirees can access the support they need without sacrificing their financial stability or quality of life.

Inflation Reduces Purchasing Power

Inflation also reduces purchasing power. In the US, the annual inflation rate reached 3.0% for the 12 months ending September 2025. Over time, that steady 3% rise means that the same amount of money buys fewer goods and services than before. For a retiree living on a fixed budget, this decline in purchasing power can slowly but steadily shrink what they can afford each month.

Flexibility refers to the ability to adjust spending, savings, and financial plans when unexpected situations or costs arise. It’s essential for retirees, who often face shifting expenses even after leaving the workforce. This mismatch between rising expenses and stable income can slowly erode long-term financial security. That’s why financial health and thoughtful budgeting are more important than ever for those in retirement.

Sustaining Stability Throughout Retirement

Financial health remains a cornerstone of a secure and fulfilling retirement, supporting both daily needs and long-term goals. Retirees face longer life spans, higher healthcare costs, and rising prices that steadily reduce purchasing power. These pressures make budgeting, planning, and flexibility more important than ever.

Retired individuals should take proactive steps now to strengthen their financial position, even if adjustments feel overdue. Seeking financial advice may also help identify gaps and new opportunities for protection. Remember, it is never too late to improve financial health and make decisions that support a more secure and comfortable retirement.