If You Think Health Care Is Expensive Now, Wait Until You Retire

The cost of medical care continues to rise, even for retirees. Here's the latest estimate for a couple considering retiring this year.

If You Think Health Care Is Expensive Now, Wait Until You Retire Photo by pathdoc / Shutterstock.com

A couple retiring this year would need more than a quarter of a million dollars simply to cover their medical costs, according to Fidelity Investments.

A 65-year-old man who retires this year would need $133,000 for health care expenses throughout his retirement, according to Fidelity’s latest estimates. A woman in the same situation would need $147,000, primarily because women live longer than men.

The combined total of $280,000 is up 2 percent since last year, when it was $275,000. It’s up 75 percent since 2002, the first year Fidelity estimated this cost — when it was $160,000 for a couple.

The good news is that 2 percent is the smallest increase since 2014. According to Fidelity, this “indicates that many of the factors contributing to the estimate, such as prescription out-of-pocket drug expenses and Medicare premiums, have remained relatively flat over the last year.”

The bad news is that the estimates are based on the assumption that the retiring couple is eligible for Medicare. This means folks who wish to retire before they are eligible — which is generally at age 65 — will need more than $280,000 to fund medical expenses in retirement.

To get a sense of how folks who retire early pay for their health care costs, Fidelity polled more than 1,000 folks between the ages of 50 and 64 who had retired within the past three years. Using personal savings is the most common way they cover these costs.

One way to get around the sky-high cost of health care in the U.S. is to retire abroad. International Living recently named Costa Rica the best country in the world for retirees in large part due to its cheap but good and modern national health care system — which is open to residents from other countries.

If moving out of the country sounds a little too drastic for you, check out “3 Bold Ways Retirees Can Cut Health Care Costs in 2018.”

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Karla Bowsher
Karla Bowsher
I’m a freelance journalist and former newspaper reporter who has covered both personal and public finance. I've worked for a top 50 major metro daily and a community newspaper as well as ... More

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