How Much Money Will I Need to Retire Just for Health Care Costs?
A 65-year old couple that intends to retire this year will need $240,000 for their medical expenses.
An analysis released by Fidelity to answer the question “how much money will I need to retire just for health care costs?” has shown that a couple who is 65 years old and intends to begin retirement in 2012 will require approximately $240,000 to pay for the medical expenses they will incur over the rest of their lives, if they do not have employer-provided retiree coverage.
This is an increase of 4 percent over the estimate from last year, which was $230,000.
In 2011, Fidelity’s estimates had declined by 8 percent from what they had been the year before. The report for 2010 showed that the same 65 year old couple who had intended to retire that year would have needed $250,000 in order to cover all of their future medical costs. That year was the first time that Fidelity had seen an annual decrease in the 10 years that it had been making the reports.
For many Americans, medical costs will be the largest expenses they will face over their retirement.
It should be noted that the Fidelity projections do not include any of the additional costs that are associated with services such as nursing home care, and they apply to individuals who will have standard Medicare coverage. Of those costs that are a part of the estimates, approximately 45 percent will be paid out of pocket by these couples, unless additional coverage is purchased in order to make the payments.
Since 2002, when the calculations were first made by Fidelity, the estimate has increased by an annual average of 6 percent (with, of course, the exception of 2011’s decline).
According to the executive vice president of the Benefits Consulting business at Fidelity, Brad Kimler, “Today’s workers must understand that the cost of health care is expected to continue rising significantly in future years.”
Medical inflation is increasing at a rate that is faster than that of living adjustments and salary increase for the majority of individuals. Unfortunately, this means that when they ask themselves, how much money will I need to retire just for health care costs, the answer will likely only be higher every year.