Personal Finance

Are you saving enough for healthcare costs in retirement? Probably not


Good health has never been worth so much.

The average couple retiring today at 65 will need $260,000 to cover medical costs in retirement, according to Fidelity’s Retiree Health Care Cost Estimate, which tallies up such eye-popping figures every year. That chunk of change is a 6 percent increase from last year’s $245,000.

The spike is mainly attributable to the uptick in medical services use and, of course, ever-rising drug costs. And sure, it also may sound like a lot, but it falls within the typical range for healthcare costs, which have climbed faster than overall inflation. The sad news is that this figure is for the relatively healthy retiree couple with normal healthcare expenses.

About one-third of the total $260,000 cost is for premiums for Medicare Part B (doctor services and outpatient care) and Part D (prescription drugs). Most people with Medicare paid $1,260 this year for Part B premiums, according to the National Committee to Preserve Social Security and Medicare. (Because the price is tied to inflation, it can be more for new retirees and high-income beneficiaries.) Part D premiums, on the other hand, vary by plan and by where you live.

In addition to Medicare premiums and co-pays, a retired couple has to budget for items not covered by traditional Medicare, such as vision, hearing and dental costs. Certain other expenses, such as assisted living and home health aides, aren’t covered by Medicare either, so some people buy long-term care insurance for precisely these expenses.

Fidelity estimates that the average 65-year-old couple retiring this year would need an additional $130,000 for long-term care expenses — on top of the $260,000.

More wallet-stretching news: Fidelity expects the annual retiree healthcare estimate to jump between 4 percent and 6 percent every year. And the projections assume the man dies at 85 and the woman at 87. If you live longer, you better figure on paying out more moolah.