When it comes to health insurance in retirement, most people will ask: “Can I afford the premiums?”
But this is only part of the picture. A more important question to ask that we perhaps don’t really think of is “What am I giving up to afford these premiums?”
That’s because in retirement, every dollar counts. A dollar spent on insurance is simply a dollar you don’t get to use elsewhere.
Revisiting Susan: When “Affordable” Still Feels Tight
Let’s revisit Susan from our earlier case study. With a moderate retirement portfolio, she has a monthly income of around $3,000 from ages 66 to 90, which constitutes her CPF LIFE payouts and income from her remaining retirement assets.
If she continues with her Private Integrated Shield Plan with an old rider, she would be paying about $1,550/month in premiums, which is more than 50% of her monthly income. A monthly premium of $1,550/month is computed as the simple mean premium of an IP Base Plan and rider that provides private hospitalisation coverage from Age 66 to 90. This leaves her with approximately $1,450/month for all other living expenses.
This is particularly important because healthcare premiums are not fixed. In recent years, premium revisions have been frequent, reflecting rising healthcare costs, increasing claims, and changes in the medical landscape, including advancements in medical technology and overall medical inflation.
In 2025 alone, six out of seven insurers increased premiums for their Integrated Shield Plans and riders, with adjustments ranging from 5% to more than 10%[1]. Over time, even modest increases of 5–10% every few years can compound significantly. For example, a $1,550 monthly premium today could rise to around $2,000/month in 10–15 years, and potentially $2,500/month or more in later years.
This means that what feels manageable today may become increasingly difficult to sustain throughout retirement. A higher starting premium does not just cost more now; it compounds into a much larger long-term financial commitment.
In contrast, a lower starting premium remains significantly more manageable, even as premiums increase over time. Ultimately, the issue is not just affordability today, but how resilient the plan is to future premium increases.
What This Means for Her Retirement Income?
By right-sizing her plan, Susan increases her available monthly spending by approximately $1,200/month.
This has a significant impact on how her retirement can be lived. Instead of managing on $1,450 a month, she now has $2,650, giving her significantly more flexibility in her day-to-day lifestyle and financial decisions.
At the same time, starting from a lower premium base also reduces her exposure to future premium increases. Even if premiums rise over time, the absolute dollar impact remains more manageable, helping her maintain financial stability without the stress of escalating healthcare costs.
Looking at It Another Way
Another way to think about this is: Saving $1,200/month on premiums gives Susan an additional $360,000 of retirement spending (from age 66 to 90). This is equivalent to having an additional S280,000 in retirement assets at age 65, assuming a 25-year retirement period and a return of 2% p.a. It means she has unknowingly increased her retirement capital, without needing to take on additional investment risk.
What Does This Change for Susan?
While right-sizing her policy brings clear advantages, it also comes with trade-offs that she will need to consider.
By making this adjustment, Susan benefits in several ways.
- A More Fulfilling Retirement
With greater flexibility and breathing space in her monthly income, Susan has more capacity to spend on the things that bring her fulfilment during retirement.
This could look like travelling occasionally to places she has always wanted to visit, dining out with family and friends, or simply having the time and resources to pursue hobbies and interests she enjoys.
- Lower Impact from Future Premium Increases
Healthcare premiums tend to rise over time.
With a larger financial buffer, any future increases take up a smaller proportion of her budget. This reduces the likelihood of feeling financially constrained, and allows her to better adjust to premium hikes without constant worry.
- More Liquidity and Flexibility in Spending
Having more available cash flow also gives Susan greater flexibility in how she manages her finances.
With a stronger buffer, she is better prepared to handle unexpected expenses, support loved ones when needed, and make day-to-day decisions with greater confidence rather than constraint. This also provides a sense of financial ease, knowing she is not operating too close to her limits.
On the Flip Side: What Are the Trade-Offs?
At the same time, right-sizing her plan means accepting a different set of healthcare expectations.
By moving from private hospital coverage to a restructured hospital (Ward A) plan, Susan would need to be comfortable with:
- Longer waiting times for certain treatments
- Less flexibility in choosing specific doctors
- Fewer amenities and perks typically associated with private hospitals
While she can still choose to seek treatment at private hospitals if she prefers, she should be prepared for higher out-of-pocket costs, as insurance claims would be lower due to pro-ration.
So, Is It Still “Affordable”?
Technically, yes. Susan can afford to keep her Private IP + rider. But the more meaningful question may be, Is she comfortable trading away her lifestyle for that level of coverage? Hence, affordability is not just “Can I pay for this?”, but rather “Can I pay for this without compromising the life I want to live, not just today, but sustainably over time?”
Conclusion
Retirement changes how you should think about your Shield Plan.
It is no longer just about maximising coverage and minimising out-of-pocket costs, but rather balancing protection with lifestyle, ensuring long-term sustainability and making intentional trade-offs. Because ultimately, the goal of retirement planning is not just to protect against risks, but to enable the life you want to live.
This is an original article written by Joanne Seow, Insurance Specialist at Havend.
[1] https://www.straitstimes.com/singapore/health/five-of-seven-private-health-insurers-hike-premiums-for-existing-plans