What does retirement mean to you? For me, and many Americans, it means a more centrally focused life that allows us to peruse our interests. That may be a more altruistic view, but still it is something we embrace.The other side of retirement is not quite so positive. In fact, it can be a real nightmare. Limited incomes and expanding medical care costs make it difficult to find a balance.

The cost of health care as we age begins to eat up more and more of our retirement funds. Things like copayments, deductibles and out of pocket expenses are all aspects of healthcare that we have to pay for ourselves.

Medicare may pay a portion of healthcare, but the rest of the burden is ours to bear. Knowing this is half of the battle. The rest of the fight is determining how to budget for medical expenses in retirement.

How much does Medicare Cover?

You might be shocked to learn that Medicare only covers 62% of the average medical bill, according to the Employee Benefits Research Institute. While that number might be shocking, the bigger shock is that our portion of health costs are still rising.

The focus should become on how to address these expenses before we hit retirement. The question is how to do that when the cost of health care is such an individual topic. Even so, the following tools and tips might help you to overcome the expense of senior healthcare.

Do your homework

Before you reach your Medicare pre-enrollment period research what Medicare covers and what Medicare is and what it is not. A few key things to look at are Medicare Advantage Plan options and what they offer that is different from Medicare. Another key area is the prescription drug plan that is offered by Medicare.

Key Consideration: Medicare vs. Medicare Advantage. A lot of this depends on your health care needs, which are difficult to assess because they change. Medicare Advantage plans often offer more services, but you have to do the math. Sometimes they cost more and pay less even though they are offering additional services.

The Prescription Drug Plan Debate: You have to have prescription drug coverage whether that is through Medicare or via a supplement private plan. However, you will eventually need either Medicare part D or an Advantage plan with a prescription drug plan.

The catch to look for is the tiered costs. As you use more of your drug coverage, you approach tiers where it begins to cost you more out of pocket and deductible expenses for prescription drugs. Pay close attention to how those tiers add up and choose a plan that helps you pay less the more you need prescription drug coverage.

Estimating your Healthcare needs now

The above tips are designed to help you reduce costs, but how do you budget now for healthcare expenses you will have later. Look at the statistics for what the average seniors pay for out of pocket expenses. Those numbers range from $4760 a year to $5700 for seniors in poor health.

Whether your health is good or not those number offer solid evidence to determine budget goals. $4760 over a year costs nearly $400 a month. $5700 over a year costs $475 a month. That is a lot of money when you are on a fixed income. A good tip is to make sure that other areas of living and expenses are as low as possible.

There is also the option of supplement insurance such that help to cover out of pocket expenses. The best advice is to save as much as possible to overcome these average health care expenses. Invest now in better health is also a positive way to keep costs lower.