Friday, May 17, 2013

A 65-year-old couple retiring this year would need $220,000 to cover medical costs in retirement

As reported by the AP and posted at CNBC

A 65-year-old couple retiring this year would need $220,000 on average to cover medical expenses, 8 percent less than last year's estimate of $240,000. The study assumes a life expectancy of 85 for women and 82 for men. ... 

Fidelity's projections assume that a 65-year-old couple retires this year with Medicare coverage and no additional coverage from former employers. The estimate factors in the federal program's premiums, co-payments and deductibles, as well as out-of-pocket prescription costs. The estimate doesn't factor in costs for most dental services or long-term care, such as living in a nursing home.

The company's projection has fallen 12 percent from its high of $250,000 in 2010....

A couple that knows they are likely to face $220,000 in expenses over their retirement could set up an annuity to provide about $11,000 annually over 20 years. The downside to an annuity, versus a health savings account, is that withdrawals are taxed as income. ...

This assumes an amount of $100,000 needed for a man an $120,000 needed for a woman.  
Also not that if the man lives to 92 and the woman to 94 that couple would actually need $355,000 and both have a 25% chance of living that long.  

More on the study from Fidelity.