Two hundred and thirty thousand dollars. That’s the magic number Fidelity Investments estimates an average 65-year-old couple retiring this year will need to pay for medical expenses throughout retirement, not including nursing home care. This represents an 8 percent decline from last year, when the estimate was $250,000.
This is the 10th year in which Fidelity has calculated retirement health care costs. Until this year, according to a Fidelity statement, the estimate has increased an average of 6 percent annually since the initial calculation of $160,000 in 2002. Actual costs will vary depending on a couple’s longevity and medical needs.
Medicare changes in the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act, both signed into law in 2010, reduced out-of -pocket expenses for prescription drugs for many seniors. This accounts for the $20,000 reduced estimate. But this should be considered a one-time adjustment for the time being, said Brad Kimler, executive vice president of Fidelity’s Benefits Consulting business, which helps employers assess and design their workplace benefits programs. “Today’s workers still face the prospect of significant medical expenses in retirement and must begin to include those costs in their retirement plan strategies. Americans should expect health care expenses to continue to increase annually due to a number of factors including higher costs for medical services, the introduction of new technology and an increased utilization of health care services like diagnostic testing.”
The Employee Benefit Research Institute, an independent nonprofit, released its annual retiree high care costs estimate last November. It projected that a couple with median drug expenses would need $158,000 for a 50 percent chance of having saved enough to cover health care expenses in retirement. EBRI said they would need $271,000 for a 90 percent chance.
In a survey by the Spectrem Group of investors with a net worth between $100,000 and $1 million (not including primary residence), 68 percent of investors ages 55-64 and 70 percent of those 65 and older said they were concerned about the health of their spouse. Sixty-five percent of each age group were worried about their own health, while 58 percent and 59 percent, respectively, were concerned about a family health catastrophe.