A 65-year-old couple retiring in 2008 will need approximately $225,000 to cover medical costs in retirement, according to an estimate by Fidelity Investments.
The retiree healthcare cost estimate is issued annually by Fidelity Investments. Since the estimate was first calculated in 2002, the number has risen a total of 41 percent, with an average annual increase of 5.8 percent.
As in past years, the 2008 estimate assumes individuals do not have employer-sponsored retiree health care coverage and includes expenses associated with Medicare Part B and D premiums3 (30%), Medicare cost-sharing provisions--co-payments, co-insurance, deductibles and excluded benefits (39%)--and prescription drug out-of-pocket costs (31%). It does not include other health-related expenses, such as over-the-counter medications, most dental services, and long-term care.
"With healthcare costs continuing to outpace wage increases and companies trimming retiree health benefits, financing health care has to be central to retirement planning," said Brad Kimler, executive vice president, Fidelity Investments. "Given current economic conditions, this is especially true for those planning to retire in the next few years or before they qualify for full Social Security or Medicare benefits."