When saving, you must consider the potentially high costs of medical care during your retirement years. Fidelity estimates the health care expenses facing the average 65-year old couple have risen to a record $260,000. Fidelity writes:
Paying for health care can be one of the largest expenses for people in retirement. A 65-year-old couple retiring in 2016 will need an estimated $260,0001 to cover health care costs in retirement, according to Fidelity’s Retiree Health Care Cost Estimate. This is a six percent increase over last year’s estimate of $245,000 and the highest estimate since calculations began in 2002.
The estimate applies to retirees with traditional Medicare insurance coverage and provides a general idea of the monthly expenses associated with Medicare premiums, Medicare co-payments and deductibles, and prescription drug out-of-pocket expenses.
The six percent increase in this year’s estimate is attributed to several factors, including an uptick in the utilization of medical services and rapidly rising drug costs.
“In recent years, the health care industry has experienced a period of historically low spending levels, due to a range of factors including a period of slow economic growth,” said Adam Stavisky, senior vice president, Fidelity Benefits Consulting. “Looking forward, we expect health care spending to pick up2 from where it’s been in recent years, though less than what we’ve seen over the last few decades.”
Click the map to estimate long-term care costs in your own state.