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August 16, 2006
Report: Average Couple Needs $295K for Retiree Health Expenses

A couple aged 65 retiring today and living to average life expectancy would need $295,000 to cover premiums for health insurance and out-of-pocket expenses during retirement, according to a study by the Employee Benefit Research Institute (EBRI).

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The estimate assumes average life expectancy of 82 for men and 85 for women. If the couple lives to age 95, they would need $550,000 to cover premiums and out-of-pocket expenses, according to the report. Both estimates are for retirees who have access to retiree health benefits from a former employer but pay the full premium.

EBRI notes that its studies have found that fewer employers are offering retiree health benefits, saying most workers in the United States will never be eligible for health insurance in retirement through an employer.

While workers have several options to save for retirement healthcare expenses, such as health savings accounts (HSAs), none is sufficient to come close to covering projected retiree health costs, according to EBRI. Since contributions to HSAs are limited, for example, the maximum amount than an individual could save in an HSA is $46,000 over 10 years.

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