A 65-year-old couple retiring in 2007 will need approximately $215,000 to cover medical costs in retirement, according to Fidelity Investments’ latest healthcare cost estimate. This figure is a 7.5% increase over the 2006 estimate of $200,000. The retiree healthcare cost estimate is calculated annually by Fidelity Investments. Since the estimate first was computed in 2002, the number has risen a total of 34%, with an average annual increase of 6.1%.
The 2007 estimate assumes individuals do not have employer-sponsored retiree healthcare coverage and includes expenses associated with Medicare Part B and D premiums, Medicare cost-sharing provisions, and prescription drug out-of-pocket costs. It does not include other health-related expenses, such as over-the-counter medications, most dental services, and long-term care.
Fidelity also found that a 65-year-old worker today, who is earning $60,000 and decides to retire at the end of the year, should expect that 50% of his or her pre-tax Social Security benefit will be used to pay for personal healthcare expenses in the next 16 to 18 years.
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