Retirement Health Costs Jumped 6.7 Percent in 2008, Fidelity Says

The exploding cost of health care poses one of the most serious threats to retirement security--even with Medicare covering everyone over age 65. The pressures have accelerated in recent years as health care costs accelerate. Today, Fidelity Investments reported that a 65-year-old couple retiring in 2009 will need approximately $240,000 to cover medical expenses in retirement even with Medicare insurance coverage. That figure is 6.7 percent higher than Fidelity's 2008 estimate of $225,000.

Fidelity has calculated an retiree health care costs annually since 2002. For many Americans, health care is likely to be their largest expense in retirement. Over the past seven years, the amount needed for retiree health care costs has jumped $80,000 or 50 percent from $160,000 in 2002, Fidelity says.

The Fidelity 2009 retiree health care cost estimate assumes individuals do not have employer-provided retiree health care coverage, but do qualify for Medicare. The estimate 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 Medicare. The estimate does not include other health-related expenses, such as over-the counter medications, most dental services and long-term care.

For details, visit RetirementRevised.