Estimating Health Care Costs from Age 65 to 90

[JackJester]

Hello. I am trying to estimate HC costs in my retirement planning spread sheet. Currently I am assuming $350K to cover both DW and myself after we hit Medicare age in 2032. I am assuming we make it to Age 90 given family history. So, is $350K + basic Medicare for 25 years reasonable? over kill? not nearly enough? What value would you assume and why? Thank You. Note - We do not have a Long Term Care policy right now.

Jack

 

[Big_Hitter]

have you projected your expected supplemental medicare premiums and out of pocket maximums from 2032 to 2057 for both you and your spouse?

 

[MichaelB]

Hello. I am trying to estimate HC costs in my retirement planning spread sheet. Currently I am assuming $350K to cover both DW and myself after we hit Medicare age in 2032. I am assuming we make it to Age 90 given family history. So, is $350K + basic Medicare for 25 years reasonable? over kill? not nearly enough? What value would you assume and why? Thank You. Note - We do not have a Long Term Care policy right now.

Jack

Fidelity publishes a yearly estimate of estimated retirement costs for a retired couple. Their latest update estimates the cost at $280k
https://www.fidelity.com/about-fide...-retiring-in-2018-would-need-estimated-280000

A 65-year old couple retiring this year will need $280,0001 to cover health care and medical expenses throughout retirement, according to Fidelity Investments' 16th annual retiree health care cost estimate. This represents a two percent increase from 2017 and a 75 percent increase from Fidelity's first estimate in 2002 of $160,000

EBRI provides a similar estimate but uses a different methodology that looks at a range instead of average, and reports it could get as high as $368k. https://www.ebri.org/publications/notes/index.cfm?fa=notesDisp&content_id=3525

For a couple with drug expenses at the 90th percentile throughout retirement who want a 90 percent chance of having enough money saved for health care expenses in retirement by age 65, targeted savings is $368,000 in 2017.

These estimates don’t include dental or vision care, or any long term care.

 

[ivinsfan]

Those numbers are mind blowing considering Part A and B are around 140 a month or 280 for a couple. As we both hit 65 I realize that my idea that Medicare covers your bills was so wrong.

Up 75% in 16 years that number will also blow your mind...

 

[kaneohe]

Hello. I am trying to estimate HC costs in my retirement planning spread sheet. Currently I am assuming $350K to cover both DW and myself after we hit Medicare age in 2032. I am assuming we make it to Age 90 given family history. So, is $350K + basic Medicare for 25 years reasonable? over kill? not nearly enough? What value would you assume and why? Thank You. Note - We do not have a Long Term Care policy right now.

Jack

probably overkill the way your question is stated. Note that the numbers in
Michael B's links both include Medicare premiums in their results.

 

[COcheesehead]

I got actually HC policy quotes and used those in my budget numbers plus what I know I already spend yearly on dental and eyes. At 65, I use the Fido estimates for Medicare.

 

[Katsmeow]

$350K PLUS basic Medicare? That seems high. It is unclear to me if you are including supplement and Part D premiums of basic Medicare. If not seems way high.

DH has been on Medicare 5 years. His medical expenses other than premiums for Medicare, supplement (Part D is paid for by his former employer) have been less than $1000 a year. Some years they have been close to zero. The main one that he has periodically are eye exams and cost of glasses. None of that is a lot of money.

He doesn't have a hearing aid but for some people that is significant.

Dental can be costly if implants are needed.

Still -- if not including long term care your number seems high.

The exception may be for those with a health problem that requires very expensive long term medication.

 

[JackJester]

Thank You all for the feedback. I need to research all the supplemental options and estimate the costs for us. I'm not really sure what I meant by "basic Medicare"; I will work to understand that better. Having been insured by my MC for nearly the past 30 years, I have a lot to learn about Medicare. I'll stick with my conservative estimate of $350K for now and assume that it will act as LTC insurance if needed (i.e., self insured). This info from Vanguard sites a study that says “65-year-old couple desiring a 90 percent chance of having enough savings to cover total health care expenses in retirement. That figure is a daunting $265,000”. That seems to jive with the FIDO estimate of $280K. https://personal.vanguard.com/pdf/ISGPLHC.pdf

We are active and in good health for now.

 

[pb4uski]

Yeah... I don't get these at all.... for my 87 yo mother... Medigap $210/month, Part B $134/month, Part D, $49/month... so that's, say, $400/month or $4,800/year... and can be paid from retirement income.

No need to do anything other than include this in expenses... at 4% WR it would equate to $120k for one, $240k for two.

 

[ivinsfan]

Yeah... I don't get these at all.... for my 87 yo mother... Medigap $210/month, Part B $134/month, Part D, $49/month... so that's, say, $400/month or $4,800/year... and can be paid from retirement income.

No need to do anything other than include this in expenses... at 4% WR it would equate to $120k for one, $240k for two.

You would probably have to add a little something for meds....most part D don't pay 100%

 

[MichaelB]

Yeah... I don't get these at all.... for my 87 yo mother... Medigap $210/month, Part B $134/month, Part D, $49/month... so that's, say, $400/month or $4,800/year... and can be paid from retirement income.

No need to do anything other than include this in expenses... at 4% WR it would equate to $120k for one, $240k for two.

Well, $4800 annual for 30 years is $144K for one person, which is a bit more than the Fidelity number. The EBRI projection of $184K pp assumes more pharmaceuticals,

 

[imoldernu]

FWIW, our annual actual healthcare expense @ age 82, for two persons is:

Medicare $3360
Supplement $3360
Dental $1600
Pharma including plan $2000
Total $10,320

LTC $100/day insurance $2200 (3 years) Taken out in 1990.

Total annual cost 12,520
................................................................

About LTC...

If you qualify, then Original Medicare may cover expenses related to your nursing home care in a skilled nursing facility for the first 100 days as follows: For days 1 to 20 of your stay during the benefit period, you pay $0. For days 21 to 100 of your stay, you pay $167.50 per day in 2018 as coinsurance. At day 101 and beyond, you are usually responsible for all expenses associated with your nursing home care.

Skilled nursing in our CCRC is currently $63,000/yr.

The average length of stay for those patients who are able to be discharged is 272 days, or approximately nine months. The average length of stay for patients who die in a skilled nursing facility is just under two years.Oct 25, 2017

This could help in planning. We base our plan on the average.

 

[pb4uski]

Well, $4800 annual for 30 years is $144K for one person, which is a bit more than the Fidelity number. The EBRI projection of $184K pp assumes more pharmaceuticals,

Agreed, but it to frame it as an amount for 30 years sensationalizes the cost unnecessarily.... we don't see articles that you need to have $xx thousand saved for groceries in retirement.

 

[Dtail]

Agreed, but it to frame it as an amount for 30 years sensationalizes the cost unnecessarily.... we don't see articles that you need to have $xx thousand saved for groceries in retirement.

Do like that point. Groceries could run into a similar number, but I have never seen it mentioned.