Healthcare and the retirement gap is becoming one of the most significant financial challenges facing Sri Lankans as rising medical costs, an ageing population, and longer life expectancy reshape the realities of retirement planning. While many people focus on replacing their monthly income after leaving the workforce, healthcare expenses are increasingly proving to be the cost that can quietly erode years of savings if left unplanned.
Healthcare and the retirement gap highlights rising retirement costs for Sri Lankans
For most retirees, healthcare costs do not arrive as a single unexpected expense. Instead, they develop gradually. A routine medical check-up can lead to specialist consultations, diagnostic tests, long-term medication, and ongoing treatment for chronic illnesses. Over time, these recurring costs accumulate, often becoming one of the largest financial commitments during retirement.
According to Ceylinco Life, Sri Lanka’s life insurance market leader for 22 consecutive years, this is one of the most overlooked aspects of financial planning. While many people recognise that healthcare becomes more expensive with age, few make dedicated provisions for those costs before they retire.
Dhiranjan Canagasabey, Senior Assistant General Manager and Head of Marketing at Ceylinco Life, said healthcare is frequently acknowledged in theory but rarely planned for in practice.
“The single biggest financial shock in retirement is rarely a collapse in savings. It is an illness, or a prolonged condition, that was never budgeted for,” he said, noting that although Sri Lanka’s public healthcare system has served the country well, it was not designed to meet the demands of an ageing population managing multiple chronic illnesses over several decades.
Sri Lanka is entering a demographic transition that will significantly increase demand for healthcare services. By 2042, one in four Sri Lankans is expected to be over the age of 60. According to the United Nations World Population Prospects 2024, life expectancy in Sri Lanka has reached approximately 77.67 years, meaning many individuals can expect to spend nearly two decades in retirement.
Longer life expectancy is undoubtedly a positive achievement, but it also increases the likelihood of developing chronic health conditions that require continuous treatment and financial support.
Research published in the Journal of Clinical Medicine in 2025 illustrates the scale of the challenge. Deaths linked to diabetes in Sri Lanka increased by 169% between 2004 and 2020, while cardiovascular disease, hypertension, chronic kidney disease and cancer continue to account for a growing share of long-term healthcare expenditure. Unlike short-term illnesses, these conditions often require lifelong medication, regular monitoring, specialist consultations and periodic hospitalisation.
For retirees, these are not isolated medical events but recurring financial obligations.
A person managing Type 2 diabetes, for example, may require monthly medication, quarterly blood tests, regular consultations with specialists, annual health screenings and occasional hospital admissions. Each individual expense may appear manageable, but collectively they can consume a substantial portion of retirement income over 15 to 20 years.
Adding to the challenge is the rising cost of healthcare itself. Medical inflation has historically grown faster than general consumer prices in many countries, including Sri Lanka. As a result, healthcare costs that appear affordable today may become significantly more expensive over the course of retirement, widening the gap between anticipated and actual expenditure.
Sri Lanka’s healthcare financing also presents challenges. According to World Bank data updated in December 2025, total health expenditure accounts for approximately 4.4% of the country’s Gross Domestic Product, below the global average of 6.74%. Government spending on healthcare remains relatively modest, increasing pressure on households to finance medical expenses through their own resources.
Although Sri Lanka continues to provide universal public healthcare, growing demand has placed considerable strain on the system. Many retirees increasingly turn to private healthcare providers to access specialist consultations, diagnostic services or essential medicines when delays or shortages occur within the public sector.
The Institute of Policy Studies has reported that access to primary healthcare declined from 95% of the population in 2019 to 82% during 2022 and 2023, while household healthcare expenditure rose sharply during the same period. These trends suggest that out-of-pocket medical spending is becoming an increasingly important part of retirement planning.