- Fidelity estimates a healthy, 65-year-old couple retiring this year will need $275,000 to cover their health-care costs in retirement.
- In 2016, the estimate was $260,000.
Health care can be one of the biggest expenses for retirees — and those costs are growing.
A new analysis from Fidelity Investments estimates that a healthy, 65-year-old couple retiring this year will need $275,000 to cover their health-care costs in retirement. That’s up 6 percent from the $260,000 estimate last year.
“This $275,000 is a brutal number,” said Adam Stavisky, a senior vice president at Fidelity. “In many ways, it’s annually a clarion call both for people to start understanding the obligations they will face in the future and how they will best prepare for them.”
Fidelity’s calculations include premiums, cost-sharing provisions and out-of-pocket costs associated with Medicare parts A, B and D — but does not include other health expenses such as over-the-counter medications, dental services and long-term care. “Estimates are calculated for ‘average’ retirees, but may be more or less depending on actual health status, area of residence and longevity,” according to the release.
Intimidating as retirement health-care figures may be, experts say there are a variety of ways to anticipate them in your overall retirement plan — and, potentially, reduce them.
Health savings accounts, or HSAs, can be a smart tool, Stavisky said. These accounts, which are paired with high-deductible health plans, have a triple tax advantage: Contributions are tax deductible, grow tax free and can also be withdrawn tax-free for qualified medical costs.
“Given that $275,000 figure, the odds of you having too much money in a health savings account are pretty limited,” he said.