Couples retiring this year need $240,000 to cover medical expenses

Mar 31 2009

65-year-old retired couple this year would need $240,000 on average to cover medical expenses, according to a recent study by Fidelity Investments, the AP/Long Island Newsday reports.

The study assumed that the couple is covered by Medicare and has no employer-provided insurance. It also assumed that the male partner would have a life expectancy of 17 years, while the female partner would have a life expectancy of 20 years. The estimate includes Medicare deductibles, copayments and certain services that might not be covered by Medicare.

Of the medical expenses, Fidelity estimates that:

• 41% will be for Medicare copayments, coinsurance deductibles and excluded benefits;
• 30% will be for out-of-pocket prescription drug costs not covered by the Medicare drug benefit; and
• 29% will be for Medicare Part B premiums and the Medicare prescription drug benefit.

Standard of Living

Nearly two-thirds of U.S. households are at risk of being unable to maintain their current standard of living after retirement because of the cost of long-term care, according to an analysis released Tuesday by the Center for Retirement Research at Boston College, the Boston Globe reports. When considering just living expenses and health care costs, 61% of households would have insufficient retirement income, but the proportion rises to 65% after accounting for long-term care costs. According to the analysis, the odds of a 65-year-old needing at least three months of nursing home care in retirement are about one in three (Gavin, Boston Globe, 3/31).