A. According to Fidelity’s latest estimate, a 65-year-old retiring couple will need an estimated $275,000 in today’s dollars to cover health care expenses in retirement (calculated as the present value of monthly Medicare premiums, copayments and deductibles, and prescription drug out-of-pocket expenses, but not nursing home or long-term care expenses).
Notably, though, it’s not as though these retiree health expenses are actually due at a lump sum at the start of retirement; instead, the retirement is that they’re simply a series of $5,000 – $10,000/year expenses for retirees throughout the retirement years (albeit slightly lower in the early years, and higher in the later years as intermittent health events lead to a progressive series of higher-cost “one-off” health events). And in fact, the relative stability of health care expenses in retirement (at least until the later years) means it’s often easiest to simply earmark certain income retirements in retirement for those (recurring) health care expenses, such as one spouse’s ongoing Social Security payments.
Pre-retirees might look to fund their future retiree health expenses by contributing to a Health Savings Account, and leveraging the HSA’s triple-tax-free benefits not for current medical expenses but retiree medical expenses. And for more affluent individuals, often the biggest challenge of health care expenses in retirement isn’t the actual cost, but simply the “sticker shock” of transitioning from a world where the employer often pays some, part, or even all of the health insurance expenses, while the retiree must handle the entire cost of Medicare premiums and co-pays, and Medigap supplement insurance, all by themselves. Of course, it’s also important to remember that one of the most straightforward ways to manage retiree health expenses is simply to try to live a healthier lifestyle in the first place, too!
Check out the Marketwatch article for more details.