There are plenty of risks for retirees - and those risks may compound by the rising cost of health care in retirement.
While the cost of medical care has recently fallen, it's still nearly 30% higher than a decade ago, according to data from the U.S. Bureau of Labor Statistics. Typically, medical prices grow faster than other consumer costs.
There's also a higher likelihood of retirees needing medical care as they grow older. A 65-year-old couple who retired in 2022 will spend an average of $315,000 in health-care costs throughout retirement, not including long-term care, according to Fidelity Investments.
What's more, retirees face a greater chance of "spending shocks" due to unpredictable costs, such as medical expenses, according to J.P. Morgan Asset Management's 2023 retirement guide.
Of course, every retiree's costs will be different, said certified financial planner Anthony Watson, founder and president of Thrive Retirement Specialists in Dearborn, Michigan. "There's no silver bullet for this," he said, noting how health-care expenses can be tough to predict.
Periods of stock market volatility can further compound financial issues because of the so-called sequence of returns risk, caused by tapping your portfolio when asset values have declined. Research shows the wrong timing of withdrawals can damage your nest egg over time.
Retirees may be exposed to the sequence of returns risk through a "shock spending event," such as expensive health care, or simply higher living expenses over time, Watson said.
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One strategy to reduce this risk is boosting income by waiting to claim Social Security, he said. For 2023, the average retirement benefit is $1,827 per month, but the maximum payment jumps to $3,627 at full retirement age, which is currently 66 to 67.
Watson also suggests a "cash cushion" to help cover living expenses during a prolonged stock market downturn. "We always have to have a Plan B to fund our living expenses," he said.
While experts may suggest one to three years' worth of cash, you may trim expenses or keep less cash by supplementing with a home equality line of credit or pledged asset line of credit that uses your investment account as collateral, he said.
Carolyn McClanahan, a CFP and founder of Life Planning Partners in Jacksonville, Florida, urges retirees to become "empowered patients" when it comes to health-care spending.
"The best way to plan for health-care costs is to learn how to be a good health-care consumer," said McClanahan, who also is a physician and member of CNBC's Advisor Council.
For example, retirees may reduce unexpected medical costs and surprise portfolio withdrawals with a few health moves. You can also ask questions about tests or prescriptions before racking up expenses.
"With health care being so fee-driven, doctors have very little incentive to help you make better decisions about what you can do to keep costs down," she said.
McClanahan also plugs the financial, physical and emotional benefits of working in retirement, at least with a part-time job. "Work is one big way where people are socially engaged," which may provide a cognitive boost, she added.