The Average Couple Could Expect to Spend Over $220,000 in Healthcare Expenses Over Course of Retirement

"Americans are increasingly concerned about health care costs in retirement, with 84 percent of respondents wondering whether they will be able to cover them....

Fidelity’s research suggests many Americans greatly underestimate the amount of savings they may need to cover health care costs in retirement. A study last year of pre-retirees (ages 55-64) found that nearly half (48 percent) of respondents believe they will need about $50,000 to pay for their individual health care costs in retirement. In contrast, Fidelity’s annual Retiree Health Care Cost Estimate, which has estimated the cost of healthcare in retirement every year for more than a decade, has found that the average couple could expect to spend more than $220,000 in healthcare expenses over the course of their retirement.

In addition to underestimating these costs, many people are unaware of the long-term financial impact that making positive health decisions can have. When asked which resolution is more important to keep—financial or physical fitness—a recent Fidelity study revealed that 53 percent of respondents said they’d prefer to keep financial fitness resolutions, compared to 43 percent opting for physical fitness. However, many don’t realize the significant connection between the two—and the importance of focusing on both—especially when it comes to health care costs in retirement. ...

Fidelity estimates an individual with a pre-retirement income of approximately $80,000 and in poor health5 may need an income replacement ratio as high as 96 percent of his or her pre-retirement income each year, or approximately $76,800. Conversely, that same person in excellent health might need just 77 percent, or $61,600, a nearly 20 percent difference...."

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