When planning for health-care costs in retirement, it pays to factor in a particular worst-case scenario: an earlier-than-anticipated workforce exit.
A new analysis from Fidelity Investments estimates that a healthy 65-year-old couple retiring this year will need $280,000 to cover their health costs in retirement. For individuals, the projection is $133,000 for a man and $147,000 for a woman.
Fidelity’s calculations include premiums, cost-sharing provisions and out-of-pocket expenses associated with Medicare parts A, B, and D. The figures do not include other expenses such as over-the-counter medications, most dental services and long-term care, and do not factor in any employer-provided retiree health coverage.
“Actual assets needed may be more or less depending on actual health status, area of residence, and longevity,” according to Fidelity.
The $280,000 estimate is up 2 percent from $275,000 last year, the smallest increase in the annual analysis since 2014. Part of the reason is that drug costs have, at least for now, leveled off, said Hope Manion, senior vice president with Fidelity Benefits Consulting.