Fidelity Says Retirees Need $200K for Health Costs
A couple without employer-sponsored retiree health coverage retiring at age 65 will need $200,000 on average to pay for out-of-pocket health care costs during retirement, according to Fidelity Investments' annual estimates, the Wall Street Journal reports (Levitz, Wall Street Journal, 3/7). The 2006 estimates represent a 5.3% increase from $190,000 in 2005, according to Fidelity, which began releasing the projections in 2002 (Reuters/Los Angeles Times, 3/7).
Fidelity estimates that 32% of retiree health care spending will go toward Medicare Part B and D premiums and associated expenses; 36% will fund Medicare cost-sharing and excluded benefits; and 32% will pay out-of-pocket costs for prescriptions drugs. The estimates do not include most dental services, over-the-counter medications or long-term care, the Journal reports.
In addition, Fidelity predicts that the percentage of U.S. residents with access to employer-sponsored retiree health benefits will decrease by 25% to 50% (Wall Street Journal, 3/7). The cost estimates have increased an average of 5.8% annually since 2002, for a total increase of $40,000 (Fitzgerald, Boston Herald, 3/7).
Brad Kilmer, a vice president at Fidelity who oversaw the study, said the amount people will need to fund their retiree health care expenses will vary depending on individual medical needs (Reuters/Los Angeles Times, 3/7).