Retiree Health Care Costs Are Rising
Factors driving the increase include longer life spans, health care inflation and health bills for those who retire before they’re eligible for Medicare.
A 65-year-old couple retiring this year can expect to spend $295,000 on health care expenses throughout retirement, according to Fidelity Investments’ latest Retiree Health Care Cost Estimate. That’s an increase of 18% since 2010, when the amount was $250,000, but up just 3.5% from last year, reports Fidelity. (For single retirees, the 2020 estimate is $155,000 for women and $140,000 for men.)
Factors driving the increase in costs, says Fidelity, include longer life spans, health care inflation that continues to outpace the rate of general inflation, and high health costs for early retirees. Many Americans retire at 62, leaving a three-year gap before they are eligible to enroll in Medicare.
The estimates assume that retirees are enrolled in traditional Medicare. The largest portion of the $295,000 cost is from Medicare co-payments, deductibles and excluded benefits, as well as Medicare Part B and Part D premiums and out-of-pocket costs for prescription drugs. However, the estimates do not include the potential cost of long-term care.
