A former Connecticut state representative, now 95 years old, hasn't been in a hospital since the 1970s, and she has saved quite a bit of money by staying healthy. Medicare beneficiaries over the age of 85 spend, on average, 30 percent of their household income on out-of-pocket medical expenses.

It is difficult to bank on good health while planning for long-term care needs, but exercising can preserve hard-earned assets by avoiding medical costs. The former legislator says daily exercise and a healthy diet have kept her fit-thereby saving money. In-home care may be less expensive than a hospital stay, but nothing is cheaper than remaining healthy.

Remaining in good health can also mean working later in life to accumulate a larger nest egg. However, one expert said those with higher incomes or retirement savings may end up paying more. A Medicare beneficiary may spend three times more as a percentage of income on medical expenses compared to a non-Medicare beneficiary.

Either way, everyone who is retired already or hopes to retire one day should learn from the representative's health regimen. She suspects a meat-and-potato diet contributed to her parents' early deaths and she now eats mostly fruits and vegetables. She also believes staying active has helped her stay healthy.

As for exercise, the woman works out seven days a week. She manages arthritis by stretching during her 30-minute workout and adds two-pound weights every other day.

Her effort is worth it; one institute estimates that a 65-year-old couple will need $271,000 to cover out of pocket medical expenses during retirement.

Source: Sun-Sentinel, "Good health keeps wealth in old age," Donna Gehrke-White, April 30, 2012