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Retired Couples Will Need $200,000 for Basic Medical Costs

  • March 10th, 2006

Couples retiring at age 65 who lack employer-sponsored health coverage will need an average of $200,000 to cover basic medical costs during retirement, according to a new annual estimate by Fidelity Investments.

Fidelity has found that most people don't take health care into account when planning for retirement, even though it represents the largest single expense for most people in retirement. The 2006 estimates are a 5.3 percent increase from $190,000 in 2005, according to Fidelity. The brokerage's estimate for health-care costs for retired couples has jumped by $40,000 since it began tracking such expenses in 2002.

The estimate assumes that a couple 65 or older relies heavily on Medicare. The estimate includes expenses associated with Medicare Part B and D premiums ($64,000), Medicare co-payments, coinsurance, deductibles and excluded benefits ($72,000), and prescription drug out-of-pocket costs ($64,000). Fidelity's estimate does not include other health expenses, such as over-the-counter medications, most dental services and long-term care.

Meanwhile, Fidelity predicts that the number of companies offering health benefits to retirees will fall sharply in coming years.

"Health care costs have the potential to significantly erode an individual's retirement savings," said Brad Kilmer, a vice president at Fidelity who oversaw the study. "This is the part of retirement people frequently forget."

For a MarketWatch article on the study that offers tips on how to reduce the cost of health care in retirement, click here.

For a Los Angeles Times article on the Fidelity study, click here.

For a critique of the Fidelity study, click here.

Local Elder Law Attorneys in Ashburn, VA

Evan Farr

The Law Firm of Evan H. Farr, P.C.
Fairfax, VA

Loretta Williams

Hale Ball Carlson Baumgartner Murphy PLC
Fairfax, VA

Susan Pollack

Needham Mitnick & Pollack, PLC
Falls Church, VA

Last Modified: 03/10/2006

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