Health Care Costs for Couples in Retirement Rise to an Estimated $245,000

[Big_Hitter]

While many things get better with age, new research shows the cost of health care isn't one of them. Fidelity's Retirement Health Care Cost Estimate reveals that a couple, both aged 65 and retiring this year, can now expect to spend an estimated $245,000 on health care throughout retirement, up from $220,000 last year1.

https://www.fidelity.com/about-fide...health-care-costs-for-couples-retirement-rise

 

[DEC-1982]

And I assume that doesn't cover long term care. Or does it? After reading the article, I couldn't figure that out.

I was reading Tuesday and Wednesday issues of Wall Street Journal. There was a discussion of how pharma companies are jacking up drug prices, so even as usage falls to half, their revenue is actually doubling inspite of the fall in usage.

 

[Bestwifeever]

And I assume that doesn't cover long term care. Or does it? After reading the article, I couldn't figure that out.
...

Time for new glasses? From the article cited, second paragraph:

"The estimate assumes enrollment in Medicare health coverage but does not include the added expenses of nursing home or long-term care."

 

[DEC-1982]

Time for new glasses?

Quite possible.

 

[youbet]

Articles like this remind me of why I'm pleased that our FIRE situation is pretty conservative. I can give up a vacation, postpone a new car or drink cheap beer if I have to. But darn, I don't want to ever need some $$$ to spend on a family health issue and not have it. That would just kill me.......

I agree with the article that it's likely that OOP costs for geezer health care will be rising going forward.

 

[braumeister]

Sounds pretty reasonable to me.
DW and I have both been on Medicare for a little over three years, and during that time the total billed amount of our medical care was about $31.5K.

We're pretty healthy but cataract surgery bumped it up a lot in one year.

Still, that's an average of over $10K per year and projected out over an optimistic 30 years into the future it tallies pretty well with Fido's estimate.

OTOH, the total amount paid to those medical care providers was only about one third the billed amount. So (as always) the truth lies somewhere in between.

 

[daylatedollarshort]

I've got $10K a year budgeted for two.

 

[ejman]

Sounds about right, $10,000 a year for two over a 25 year retirement...

 

[bingybear]

I had thought I had heard similar amounts before. I think in 2010 it was $250k.
So it doesn't sound all that bad if you've been listening to fidelity estimates. @54 and expecting to replace a pacemaker every 8-12 years.... I bet I could be on the high side.

 

[Corporateburnout]

This year we expect our medical spending to be @14K due to extensive dental work. Our budget is 12K for the two of us.

 

[dallas27]

245 seems very reasonable for a 30+ year retirement


Sent from my iPhone using Early Retirement Forum

 

[hnzw_rui]

245 seems very reasonable for a 30+ year retirement

More like 20-22 years. Married, retired at 65, life expectancy - male 85, female 87.

 

[enjoyinglife102]

I know everyone's situation is different and I sympathize with those experiencing health issues, but since the FIDO information deals with averages, the CDC estimates that 75% of healthcare spending is largely on conditions that are preventable. Doesn't take a lot either; walk regularly, don't smoke, moderate drinking, maintain a healthy weight getting 5-7 servings of fruits and vegetables.

 

[sengsational]

More like 20-22 years. Married, retired at 65, life expectancy - male 85, female 87.

If you plan for average life expectancy, you might get lucky and unlucky at the same time. Live longer, but out of money.

 

[hnzw_rui]

If you plan for average life expectancy, you might get lucky and unlucky at the same time. Live longer, but out of money.

The $245,000 estimate from the Fidelity figures are based on married, retire at 65, life expectancy - male 85, female 87 so it's not for a 30-year retirement, just 20-22. It seems to average out to ~$1,000 per month so cost for 30 years will be ~$350,000.

Indeed, I'm personally planning for a 100-year life expectancy (or around 45 years of retirement).

 

[Big_Hitter]

walk regularly, don't smoke, moderate drinking, maintain a healthy weight getting 5-7 servings of fruits and vegetables.

good advice but that sounds pretty brutal

 

[Danmar]

Our budget includes $18k per year for both of us. Includes dental, expensive physicals every year,etc. This is in Canada. Americans have much bigger health care issues. Late life health expenses (nursing home) expenses can run $7-8k per month in Toronto. I would imagine could be even more expensive in the US?

 

[mickeyd]

I'm always at the low end of these kind of surveys. Our only medical expenses are the actual Medicare premium expenses that are deducted from our SS monthly income stream and any dental expenses, which run a few hundred $ annually so far. TFL pays for the balance.

 

[rbmrtn]

My experience with medicare has been managing my 93yr old mothers bills ( I'm still 10yrs away from it ). She does have retiree health plan as secondary. I just don't see these numbers. she has paid very little since being on medicare. No way could she have paid $200K+ in medical expenses... she has never seen that amount of money.

So if the couple is paying $200k+ does that mean they are running up bills in the range of $1.2M ( assuming they pay 20% and medicare is 80% )

 

[MichaelB]

There have been a few discussions on the Fidelity estimate for retirement health care. Their methodology is not public so the number has not been scrutinized, but it does get a lot of press. From a prior thread (here) , one reference to their calculation (here)

As part of the estimate, Fidelity looked at monthly expenses associated with Medicare Part B and D premiums, co-payments, co-insurance and deductibles, such as for doctors' office visits and outpatient services. The estimate takes into account out-of-pocket costs for things such as vision and hearing exams, eyeglasses and hearing aids.

The Fidelity number is a possibility but we know it cannot be an average because we know that a large part of the senior population does not have the income and assets needed for that level of spending.

 

[daylatedollarshort]

There have been a few discussions on the Fidelity estimate for retirement health care. Their methodology is not public so the number has not been scrutinized, but it does get a lot of press. From a prior thread (here) , one reference to their calculation (here)
The Fidelity number is a possibility but we know it cannot be an average because we know that a large part of the senior population does not have the income and assets needed for that level of spending.

The Consumer Expenditure Survey has $5,849 per household for over 65 1.8 consumer units (aka people) per household, or $3,249 per person per year. And some of those consumer units might not be getting the best care or have money to spend on dental treatments not covered by Medicare, so we upped the amount in our retirement budget a bit.

The Fidelity estimates are from:

"Fidelity Benefits Consulting, 2014. Based on a hypothetical couple retiring in 2014, 65 years or older, with average (82 male, 85 female) life expectancies. Estimates are calculated for "average" retirees, but may be more or less depending on actual health status, area of residence, and longevity. The Fidelity Retiree Health Care Costs Estimate assumes individuals do not have employer-provided retiree health care coverage, but do qualify for the federal government’s insurance program, Medicare. The calculation 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."

http://www.fidelity.com/inside-fide...s/fidelity-analysis-reveals-extra-health-care

 

[youbet]

The Fidelity number is a possibility but we know it cannot be an average because we know that a large part of the senior population does not have the income and assets needed for that level of spending.

That statement confuses me MichaelB. Why couldn't the Fidelity number be an average with lower amounts spent by folks without the resources to spend more averaged with higher amounts spent by those that can afford to spend more?

I think the issue is that the fidelity number IS an average, a measure of central tendency, but with a wide dispersion of data around it. That is, likely some are spending much more and some much less than the Fidelity average number.

 

[jim584672]

I call BS on Fidelity. They do not disclose how they arrive at the number but you know they have a vested interest in making sure the number is high.

 

[youbet]

I call BS on Fidelity. They do not disclose how they arrive at the number but you know they have a vested interest in making sure the number is high.

FIRE'd nine years with the past three on Medicare Parts A, B and D plus a supplement, I find the Fidelity estimate reasonable. I'd hate to be counting on much less. If it's high for you, so be it. I'm sure there are many people that are far above and far below their average number.

I'd worry more about an estimate that seemed too low. Getting caught in retirement needing much more for health care costs than planned could be a pita!

What's your estimate? And if your estimate is significantly lower than Fidelity's, how are you doing it?

 

[braumeister]

My experience with medicare has been managing my 93yr old mothers bills ( I'm still 10yrs away from it ). She does have retiree health plan as secondary. I just don't see these numbers. she has paid very little since being on medicare. No way could she have paid $200K+ in medical expenses... she has never seen that amount of money.

So if the couple is paying $200k+ does that mean they are running up bills in the range of $1.2M ( assuming they pay 20% and medicare is 80% )

As I tried to imply in my earlier post, I think the Fidelity estimate refers to billed charges, not the amounts paid, which would be much lower.