Retiree couple needs $225K for medical
By EILEEN ALT POWELL,
AP Business WriterWed Mar 5, 10:11 AM ET
A couple retiring this year will need about $225,000 in savings to cover medical costs in retirement, according to a study released Wednesday by Fidelity Investments.
The figure, calculated for a couple age 65, is up 4.7 percent from the $215,000 estimate for 2007, the Boston-based financial services company said.
And it is similar to other projections for health care costs in retirement — daunting figures given that longer life spans also are requiring workers to increase retirement nest eggs.
A separate study released last month by the Center for Retirement Research at Boston College estimated that an individual needs to go into retirement with some $102,000 earmarked just for health care coverage, while a couple needs about $206,000.
Given current levels of retirement savings, the center said, six in 10 older workers are "at risk" of being unable to maintain their standard of living in retirement.
The Fidelity study, which has been conducted annually since 2002, assumes workers do not have employer-sponsored retiree health care coverage. It includes expenses associated with Medicare premium payments as well as co-payments and deductibles, plus out-of-pocket prescription drug costs.
"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," Brad Kimler, executive vice president of Fidelity's benefits consulting group, said in a statement accompanying the report.
Fidelity's first study in 2002 found that a couple needed $160,000 in savings to fund medical costs in retirement, and that total has risen an average of 5.8 percent a year.
The study blamed the rising health care costs this year on higher unit costs, for example the cost of a doctor's visit; higher utilization rates for health care services; rising costs associated with new technologies; and increased incidence of some chronic conditions, like diabetes.