Several studies have estimated health care costs in retirement at $5,000 or more per year, per person.
For 16 years, Fidelity Investments has surveyed retirees to get a good estimate of their health care costs.
Their research has found that a typical 65-year old couple retiring this year will need $280,000 in total to cover health care and medical expenses throughout retirement. (That excludes long-term care costs.)
That’s why many financial planners assume that health care could easily be their clients’ single largest expense in retirement, after housing costs. Rapidly rising health care costs are one reason we urge clients to save more for retirement, and we take steps to inflation-protect portfolios by including more growth investments.
Here’s where the good news comes in. A new study by the Employee Benefit Research Institute (EBRI) suggests that retiree health care costs may not be as hefty as we’ve assumed. In fact, they say that many people get by spending only $1,000 or so on medical expenses each year in retirement.
If that’s true, a typical couple could spend $250,000 or so less in retirement than previously assumed, meaning your money will last longer and you’ll have more to spend on the fun stuff!