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Planning for Health Care Costs in Retirement
It is estimated that the average couple will need $315,000 to cover medical expenses in retirement, excluding long-term care.1
Where does retiree health care money go?2
Four Things You Should Know about Medicare
U.S. Census Bureau data shows that the average retirement age in the United States is 63, but Medicare doesn't start until age 65.3 You may need to help clients bridge that gap.
Although the coverage gap in the Medicare drug benefit known as the “donut hole” has effectively been closed, retirees may still pay up to 65% of prescription drug costs (not including plan premiums) before reaching the catastrophic level of coverage.4
Medicare may not cover all (or even most) of retirees' health care expenses. As a result, many Medicare beneficiaries may need to purchase supplemental insurance.
Medicare does not cover many significant expenses that clients may face in later years, including long-term nursing home stays.
This is Your Opportunity
- 1. 2022 Retiree Health Care Cost estimate based on a hypothetical opposite-gender couple retiring in 2022, 65-years-old, with life expectancies that align with Society of Actuaries' RP-2014 Healthy Annuitant rates projected with Mortality Improvements Scale MP-2020 as of 2022. Actual assets needed may be more or less depending on actual health status, area of residence, and longevity. Estimate is net of taxes. The Fidelity Retiree Health Care Cost Estimate assumes individuals do not have employer-provided retiree health care coverage, but do qualify for the federal government's insurance program, Original Medicare. The calculation takes into account cost-sharing provisions (such as deductibles and coinsurance) associated with Medicare Part A and Part B (inpatient and outpatient medical insurance). It also considers Medicare Part D (prescription drug coverage) premiums and out-of-pocket costs, as well as certain services excluded by Original Medicare. The estimate does not include other health-related expenses, such as over-the-counter medications, most dental services and long-term care.
- 2. Fidelity Benefits Consulting 2022.
- 3. U.S. Census Bureau, January 2018.
- 4. Medicare.gov, September 2022.
- “Medicare & You 2023,” National Medicare Handbook, U.S. Department of Health and Human Services, Centers for Medicare & Medicaid Services, Baltimore, MD, CMS Production No. 10050, October 2015.