are figures that may make you sick if you are planning
to retire soon and havenít looked at what your health
care costs will be be.
you are 65 and retiring this year, you will need about
$130,000 during retirement to cover your health care
expenses. For a couple, the total is about $260,000,
according to an estimate reported this week by Fidelity
has to be a shock for many people close to retirement.
to the U.S. Government Accountability Office, about half
of people close to retirement have no retirement
savings. Among those who have savings and are within 10
years of retirement age, half have accumulated no more
than $104,000 in savings.
15 percent of near-retirees have $500,000 saved. If you
are among them, you might be gasping now: Clearly
$500,000 looks puny when you assume that you will have
to use $260,000 of it to pay for insurance for doctors
and hospitals, and extras like dentists, glasses and
you think you can shave something off those costs, itís
not likely. Fidelity bases its estimate on what people
must pay each year to get Medicare and the additional
medical costs that arenít covered by Medicare.
people assume Medicare is free, but itís not. The
average person will pay $107.60 a month next year for
the monthly premiums the government charges to get
Medicare doctor and hospital coverage, or what is known
as Medicare Part B. Then for drug coverage, the average
monthly cost will be $40.66, according to a recent
Medicare trustees report.
even after paying all of those charges, you will be far
from done. Medicare pays only part of medical costs, so
besides paying for their Medicare, retirees need to buy
supplemental insurance policies. They are called Medigap
and average about $180 a month. And you arenít done
with costs after that, either. There are additional
out-of-pocket expenses for medicine, dentists, eye
doctors, glasses, hearing aids at $5,000 a pop and a lot
average retiree gets about $1,350 a month from Social
2002, each year Fidelity has looked at medical costs and
how they have been growing. With that, the investment
firm has estimated what retirees are likely to have to
pay in the years ahead. Fidelityís estimates are
generally considered reasonable among financial
health care costs and life expectancy both rising, this
yearís estimate is about 6 percent higher than last
yearís and about 14 percent higher than 2014ís.
Fidelity Senior Vice President Sunit Patel said the
estimates assume health care costs will rise 4 to 5
percent a year. Thatís higher than the 2 percent
average from 2010 to 2015, but lower than the 6 to 8
percent that preceded the recent slowdown in costs, he
truth is no one knows with certainty what will happen
over 22 years," Patel said, although the estimates
help people plan.
assumes a person will retire at 65 and live to the
average retirement age calculated by actuaries. Thatís
85 for a man and 87 for a woman. Because women tend to
live longer than men, women should assume higher total
health care costs over their retirement years.
Consequently, a single woman might expect to pay
$135,000 for health care during retirement and a man
$125,000, according to Fidelity.
is one reason why women must be especially attentive to
savings and calculating retirement needs. They can face
shortages of savings late in life after devoting large
amounts to care for ill husbands.
major cost that is not woven into Fidelityís health
cost estimate is long-term care insurance, which helps
elderly people pay for nursing assistants when they canít
walk, are recovering from surgery or going through
treatment for a long illness such as cancer. Currently,
a daily cost of $250 is common for such care, possibly
totaling about $90,000 for a year. Medicare doesnít
pay any of it.
estimated that a couple would need an additional
$130,000 to pay for a long-term care insurance policy
that would provide $8,000 a month during three years of
care. The estimate assumes inflation adjustments in
everyone needs long-term care insurance," Patel
said. It depends on variables such as the amount of
money you could devote to the care if needed and whether
family members could care for you. People who want the
insurance, he said, should get it around age 50 because
by 65 health conditions such as osteoporosis, diabetes
or heart trouble could make people ineligible.