Healthcare products and services might not be the most glamorous way to spend your hard-earned retirement savings, but these vital expenses can’t be ignored.

In fact, new figures reveal the cost of aged care is increasing at a greater rate than inflation and conservative investment returns, making the real cost to consumers a larger portion of their total income.

What’s more, rapid advancements in medical technology continue to lift Australians’ life expectancies and, in turn, increase the likelihood they’ll find themselves in residential aged care.

IFS head of technical, research and advice Craig Sankey.

Even with government subsidies, which account for roughly 70 per cent of age-related medical expenses, Australian retirees will need to ensure they can afford the additional cost.

But Craig Sankey, Industry Fund Services head of technical, research and advice services, said members will have little reason to worry so long as they plan ahead.

Retirement spending is shaped like a ‘U’

When someone retires, their spending typically spikes, with retirees taking money from super to fund a long-awaited holiday or buy a new car (or similar luxuries) – and after 40-plus years in the workforce, they’ve typically earned it.

Traditionally people have assumed that expenditure starts to be reined in after a couple of years, and then either remains flat or, in some cases, declines.

More recently, though, Mr Sankey said, retirees have begun to realise their spending actually increases again towards the end of life, as medical bills and aged-care costs begin to add up.

“It’s almost like a ‘U’ shape, where expenses go up quite considerably again in the last few years of their lives because generally most people have ill health at that period,” he said.

“That’s something to bear in mind when you are saving for retirement.”

That’s especially true for those who find themselves in need of round-the-clock care in residential aged-care facilities, and can present a real challenge for those who haven’t adequately prepared.

Unfortunately, there’s no way to predict how costly an individual’s medical bills will be. But Mr Sankey encouraged retirees to nevertheless consider what they might need in their later years and factor it into their retirement planning sooner rather than later.

Speak to your GP

Medical experts might not be able to answer your burning money questions, but Mr Sankey said they can play an important role in managing your post-retirement finances.

Mr Sankey said retirees should speak to their doctors or relevant specialists and form a plan to help maintain their fitness and general wellbeing, because the benefits of doing so are two-fold.

First, healthier retirees can expect a better quality of life throughout their retirement, letting them spend more time doing the things they enjoy.

The second benefit is that healthier people will likely incur fewer and smaller medical bills, reducing the financial burden associated with ageing and giving you a bit more money to play with later in retirement.

Know what you’re entitled to

Governments offer a range of support services and subsidies for older Australians, no matter what their personal situation, and retirees should make sure they’re aware of all their options.

“A lot of people think these subsidies are all about moving into aged care, but most people who receive assistance don’t move,” Mr Sankey said.

“There are a range of services that are provided to people wanting to stay in their own home, and government actually prefers that as well because it doesn’t cost them as much money, so it’s a win-win.”

Those who are unsure what kind of support is available can check what they’re entitled to on the government’s My Aged Care website.