Your clients' health costs in retirement: $240,000
By Lauren McNitt
If your clients are counting on Medicare to cover their health care costs in retirement, tell them to think again.
Even after accounting for traditional Medicare insurance coverage and omitting the cost of nursing home care, health costs in retirement for a 65-year-old couple retiring in 2012 are estimated at $240,000.
This estimate, calculated by Fidelity’s Benefits Consulting business, has increased an average of 6 percent annually since the initial calculation of $160,000 in 2002. This increase underscores the need to account for health care costs in your client’s retirement plan.
Fidelity warns that couples who are planning to rely on Social Security benefits to cover medical expenses should reassess.
The company compared Social Security’s average cost of living adjustment with the estimated average annual increase in health care costs. According to the comparison, a 65-year-old couple retiring this year should be prepared to use 35 percent of their annual Social Security benefit to pay for health care. In 15 years, the percentage will rise to about 61 percent.