American retirees keep making these 5 costly Medicare mistakes — how to avoid them and grow your nest egg
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Turning 65 in the U.S. means finally being able to rely on Medicare covering most of your health expenses. But before you join the 67 million Americans enrolled in this program, it’s important to understand what’s covered and what’s not.
If you have already been receiving Social Security benefits for at least four months when you turn 65, you’ll automatically be enrolled for Medicare Part A — but you will need to sign up for Part B and other coverage for yourself.
Navigating the rules around Medicare can feel overwhelming — especially when mistakes can end up costing you dearly. You could easily overlook important deadlines and end up with gaps in your coverage, higher out-of-pocket costs, or even miss out on advantageous tax breaks.
And when you’re living on a fixed income, the last thing you want to do is leave money on the table. Here are three costly Medicare mistakes and how to avoid them.
Medicare and Medicare Advantage plans have a number of differences. Not understanding these means you could be overpaying for a plan that’s filled with features you don’t need.
Medicare plans are offered by the government and designed for those aged 65 or older or qualifying individuals with certain disabilities. Private health insurance companies offer Medicare Advantage plans for those age 65 and up.
If you are on the cusp of retirement and are wondering about your healthcare expenses or your ability to meet your out-of-coverage needs, getting ancillary health insurance can ease your worry.
Before signing up for any plan, ask to see the plan’s current formulary, which is a list of the medications a plan covers. And be sure to confirm if your doctor and providers are covered under a potential plan.
Not looking over whether your current doctor and preferred providers are covered under the plan you choose could end up costing you thousands of dollars in out-of-pocket costs.
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Taking care of yourself during old age can be difficult for many, especially if you have a disability or chronic illness. According to the Administration for Community Living, Americans turning 65 today have a roughly 70% chance of needing long-term care services in some capacity during their golden years. However, Medicare typically doesn’t cover long-term care in a nursing home.
With costs skyrocketing, making other arrangements like getting long-term care insurance can ease the burden on your finances, making sure your nest egg doesn’t take a direct hit.
As of 2025, the cost of a private room in a nursing home averages around $12,775, while the median cost of a semi-private room is $11,133.
You can also get term life insurance to ensure your loved ones are taken care of after your passing.
Ethos Insurance offers fast and affordable term life insurance with flexible coverage options within just five minutes.
You can get a policy with up to $2 million in coverage starting at just $2 per day. The best part? You don’t need any medical exams or blood tests to get qualified.
Eligible policies with Ethos can also get a free legal will.
If you want a low-risk option to invest your discretionary funds, consider investing in a certificate of deposit (CD). The rates offered on CDs are typically higher than standard rates offered on saving accounts, but the money remains locked in during the term of the deposit.
If you’re looking for safe, high-return options, certificates of deposit (CDs) are a great choice.
A CD is a low-risk savings option that can yield interest comparable to, or even higher than, the top savings accounts. The trade-off for this higher rate is that your money stays locked in the account for a set period.
If you want your funds to remain accessible, you can also consider opening a high-yield cash account.
Investing any extra money can also help you to build your emergency savings. Acorns makes investing effortless by rounding up your everyday purchases and automatically investing the spare change. By simply downloading the Acorns app and linking your bank account, every debit or credit card transaction is rounded up to the nearest dollar, with the remainder invested in a diversified portfolio of ETFs built by experts.
It’s a simple way to grow your wealth while spending on what you enjoy.
You can also add a custom touch to your portfolio with Acorns Gold. The premium plan allows you to add individual stocks to your portfolio in addition to your expert-built smart investment portfolio.
Sign up now and get a $20 bonus investment to jump-start your savings. If you opt for the Acorns Gold plan, the first month is free.
One of the creative ways to help fund expenses in your retirement is through a reverse mortgage, which allows you to tap into your home’s equity to cover expenses like travel, healthcare, and daily living.
Many homeowners aged 65+ have a median home equity of over $250,000, according to the National Council on Aging. This is quite substantial.
A reverse mortgage can help you pay off substantial debt or fund renovations. You can choose to borrow the funds as a lump sum or fixed monthly payment and can spend it however you want.
The reverse mortgage becomes due once the borrower passes away, stops using the home as their primary residence or sells the property.
As you consider your retirement, take time to speak with a financial advisor who can help you make informed decisions.
FinancialAdvisor.net is a free online service that helps you find a financial advisor who can help you create a plan to reach your financial goals. Just answer a few questions and their extensive online database will match you with a few vetted advisors based on your answers.
You can view advisor profiles, read past client reviews, and schedule an initial consultation for free with no obligation to hire.
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This article originally appeared on Moneywise.com under the title: American retirees keep making these 5 costly Medicare mistakes — how to avoid them and grow your nest egg
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
