Grocery Outlet Holding Retirees Face Rising Health Care Costs: Insights from Patrick Ray & Tyson Mavar

'With health care inflation outpacing general costs, Grocery Outlet Holding employees should consider building personalized strategies that include HSAs and emergency reserves to help manage future medical expenses.' — Michael Corgiat, a representative of The Retirement Group, a division of Wealth Enhancement.

'As medical expenses continue to rise, Grocery Outlet Holding employees benefit from proactively incorporating health care costs into their retirement planning through customized approaches like HSAs and dedicated emergency funds.' — Brent Wolf, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article we will discuss:

1. How health care inflation impacts retirement planning for Fortune 500 employees.

2. Strategies with Health Savings Accounts (HSAs) and emergency medical funds.

3. The need for tailored planning to meet Medicare gaps and long-term care needs.

Managing retirement health care costs calls for thoughtful planning, especially as medical expenses continue to outpace general inflation. Yet, for Fortune 500 professionals approaching retirement, generic guidance often misses the mark. Patrick Ray and Tyson Mavar of The Retirement Group, a division of Wealth Enhancement, recommend a customized approach that factors in health care inflation, coverage choices, tax-efficient tools, and access to liquid funds for unexpected medical events.

Health Care Estimate for Retirees

According to the Fidelity Retiree Health Care Cost Estimate, a 65-year‑old retiring in 2025 may need approximately $172,500 saved to cover health and medical expenses during retirement—an increase of over 4% since 2024. ¹  Notably, this estimate assumes enrollment in Medicare Parts A, B, and D and excludes the costs of long‑term care.

Of that estimate, 44% of the costs would go to Medicare Parts B and D premiums, 47% relate to standard out‑of‑pocket costs (such as co-payments and deductibles), and 9% would be needed to purchase prescription medications. ¹

These trends are particularly concerning given that roughly 20% of Americans say they haven’t considered health care in retirement planning, while 17% haven’t taken any planning steps yet. ²

For its part, the Employee Benefit Research Institute (EBRI) notes that a 65‑year‑old couple with higher prescription drug expenses may need as much as $413,000 to have a 90% likelihood of covering their medical needs in retirement. ³

The Value of a Personalized Retirement Health Care Approach

In light of this data, Ray and Mavar recommend developing a retirement health care strategy tailored to each individual's situation, particularly for those at large employers like Fortune 500. Key components could include:

• - Estimating expected medical needs

• - Using Health Savings Accounts (HSAs)

• - Keeping readily available funds for emergencies

• - Aligning health care coverage with lifespan and income expectations

1. Estimating Your Health Care Budget

Although industry research offers a baseline for average health care costs, it does not consider the full range of medical expenses Grocery Outlet Holding employees could face post-retirement. For instance, if you factor in costs related to long-term care, estimates could balloon by an additional $26,000 to $127,750 per year. ⁴

Beyond long-term care, additional cost categories could include:

• - Medicare premiums

• - Prescription medications and co‑pays

• - Services not covered by Medicare (e.g., dental, vision)

Ray and Mavar caution Fortune 500 professionals not to underestimate these figures when planning.

2. Gaps in Preparedness

With 17% of Americans having taken no action to plan for health care in retirement, Ray and Mavar emphasize treating health care planning as a central component—not an afterthought.

3. Making Full Use of HSAs

Ray and Mavar suggest consistently contributing to HSAs during working years. For instance, a 35‑year‑old contributing up to $4,300 annually and assuming a 7% return might accumulate over  $500,000  by age 65, including approximately  $140,000 in tax savings . Only about  30%  of HSA holders currently invest those balances.

In their recent webinar, ' Leveraging HSAs to Reduce Health Care Costs ,' Mavar described benefits such as tax‑free growth and withdrawals for qualified medical expenses for those with high‑deductible health plans.

4. Building an Emergency Medical Reserve

Unexpected diagnoses or emergencies can quickly drain resources. Mavar recommends a separate cash reserve—such as in a money market or high‑yield savings account—outside primary retirement accounts. This may help retirees handle health care shocks without impacting long‑term investments.

• Broader Economic Landscape: Health Care Inflation and Trends

Health care spending is projected to continue rising. In a report published by federal actuaries, U.S. health care spending is expected to rise by 7.1% in 2025—well ahead of general inflation. ⁵  Reasons for this rise range from growing personal health care spending and hospital spending growth, to prescription drugs and physician services. As a result, health care expenses could account for 20% of U.S. GDP by 2033. ⁵

At the same time, many health care insurers report higher medical-loss ratios, indicating increased spending on care—including chronic disease management and mental health services—costs that could be passed down to retirees.

Key Recommendations for Retirement Health Care Preparation

• As Mavar and Ray note, the $172,500 estimate for those retiring in 2025 is simply a starting reference point. Early retirement or long-term care needs could push your total higher.

• If you are among the percentage of people who has not yet considered health care costs in your retirement planning, now is the time to start. By leveraging the triple tax advantages available through HSAs, putting aside sufficient reserves to address medical emergencies, and exploring individual strategies that take your personal coverage choices, retirement timing, and health conditions into account, you can build a safety net that considers your long-term health care spending needs.

Final Thoughts

Health care outcomes and personal circumstances vary widely—especially among long‑time Fortune 500 professionals. A tailored planning strategy—covering realistic spending projections, full use of HSAs, dedicated medical reserves, and thoughtful coverage choices—can help support a more predictable and manageable retirement journey.

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Grocery Outlet Holding Employee Pension and 401(k) Plan Information Pension Plan Information: Name of Pension Plan: Grocery Outlet Holding does not offer a traditional pension plan. Instead, they provide a 401(k) plan as their primary retirement benefit. Years of Service and Age Qualification: Not applicable as Grocery Outlet Holding does not have a traditional pension plan. 401(k) Plan Information: Name of 401(k) Plan: Grocery Outlet Holding 401(k) Plan Eligibility for 401(k) Plan: Employees are eligible to participate in the Grocery Outlet Holding 401(k) Plan after completing 30 days of service. Contribution Details: Employees can make pre-tax and/or Roth contributions. Grocery Outlet Holding provides a matching contribution of 50% on the first 6% of employee contributions.

Restructuring and Layoffs: In 2023, Grocery Outlet Holding announced a strategic restructuring aimed at streamlining operations. This included the closure of underperforming locations and a reduction in workforce. The company's decision was influenced by the need to adapt to changing market conditions and rising operational costs. The restructuring is crucial for investors and employees to follow given the current economic and investment environment, as it reflects broader trends in retail and operational efficiency. Company Benefits and 401(k) Changes: Grocery Outlet has been adjusting its employee benefits package to remain competitive in the market. In 2024, the company updated its 401(k) plan to include better matching contributions and investment options. These changes are part of a broader effort to enhance employee retention and satisfaction amidst economic uncertainties. Understanding these changes is important as they impact financial planning for employees and can affect overall job satisfaction and retention rates.

Stock Options and RSUs at Grocery Outlet Holding Corp.: Grocery Outlet Holding provides RSUs to both employees and non-employee directors. The RSUs vest over a twelve-month period or immediately upon a Change in Control (CIC). Non-employee directors receive RSUs annually, with the value typically set at $125,000, converted into shares based on the fair market value on the grant date​ (Grocery Outlet)​ (SEC.gov). Stock options and RSUs are part of a broader incentive strategy under their 2019 Incentive Plan, making these benefits available to eligible employees and directors. Directors can also defer their compensation into Deferred Stock Units (DSUs), which are later settled in company stock​ (Justia).

Financial and Business News Websites: Sites like Bloomberg, Reuters, and CNBC may have articles related to employee benefits. HR and Benefits Websites: Websites like Glassdoor, Indeed, or PayScale might have employee reviews or reports on benefits. Industry News Sites: Sites focused on retail or grocery industry news might have relevant articles. Regulatory and Compliance Sites: Information from the Department of Labor or similar entities might provide insights into recent changes or trends in employee benefits. Health Benefits Information for Grocery Outlet Holding 1. Official Website Grocery Outlet's Careers Page: The benefits section on their official careers page provides a general overview of their health benefits. They offer health insurance plans, including medical, dental, and vision coverage. Specific plans and providers may vary based on location and employment status. 2. Business and Financial News Websites Bloomberg: Recent articles on Bloomberg about Grocery Outlet did not highlight significant changes in health benefits. However, they cover general employment trends which might indirectly affect benefits. Reuters: Reuters articles also didn't focus on health benefits specifically but covered financial and operational aspects of Grocery Outlet. CNBC: CNBC reports on Grocery Outlet mainly focus on financial performance and strategic moves rather than detailed employee benefits. 3. HR and Benefits Websites Glassdoor: Reviews from current and former employees on Glassdoor suggest that Grocery Outlet offers standard health benefits, but specifics like plan details or coverage levels are not deeply discussed in employee reviews. Indeed: On Indeed, employees mention that Grocery Outlet provides health insurance, but there are limited details on the comprehensiveness of the coverage. 4. Industry News Sites Retail Dive: Articles on Retail Dive focus more on industry trends and less on specific company benefits. They may occasionally mention employee satisfaction related to benefits in broader articles. Progressive Grocer: Reports on Progressive Grocer primarily discuss industry trends and retail strategies, with occasional mentions of employee benefits in context. 5. Regulatory and Compliance Sites Department of Labor: The U.S. Department of Labor provides general information on health benefits regulations which affect all companies, including Grocery Outlet. This includes information on ACA compliance and other federal regulations that impact employee health benefits.