Couples Need Estimated Savings Of $225K To Cover Health Care Costs During Retirement, Study Finds

Main Category: Seniors / Aging
Also Included In: Health Insurance / Medical Insurance
Article Date: 10 Mar 2008 - 9:00 PDT

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A 65-year-old couple who plans to retire this year will need estimated savings of $225,000 to cover health care costs during retirement, a 4.7% increase from last year, according to a study released on Wednesday by Fidelity Investments, the St. Petersburg Times reports. Last year, Fidelity said that such a couple would need estimated savings of $215,000 (Hundley, St. Petersburg Times, 3/6). In 2002, when the study began, Fidelity said that such a couple would need estimated savings of $160,000, and the figure has increased by an average of 5.8% annually.

The study attributed the increase this year to higher unit costs, higher utilization rates for health care services, more expensive technologies and increased cases of some chronic diseases (Powell, AP/Long Island Newsday, 3/5). The study assumes that retirees do not receive health insurance through their former employers and includes Medicare premiums, copayments, deductibles and other out-of-pocket costs (St. Petersburg Times, 3/6).

Brad Kimler, executive vice president of the Fidelity benefits consulting group, in a statement said, "With health care costs continuing to outpace wage increases and companies trimming retiree health benefits, financing health care has to be central to retirement planning" (AP/Long Island Newsday, 3/5).

Ray Ferrara, a certified financial planner in Clearwater, Fla., said, "Those who don't have $225,000 are going to fall back on the government and society to take care of them," adding, "The solution is to cut benefits, raise Medicare deductibles or increase taxes. But those are not the kinds of things politicians want to tackle" (St. Petersburg Times, 3/6).

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