Fidelity Investments released in late March its seventh annual estimate of the lifetime healthcare costs that retirees will face, and the news is not good. The 2007 estimate calculates that a 65-year-old couple retiring this year would need about $215,000 to cover their medical costs in retirement, a 7.5% increase over the 2006 estimate of $200,000.
The estimate assumes individuals do not have employer-sponsored retiree health care coverage and includes Medicare Part B and D premiums, Medicare cost-sharing provisions, and prescription drug out-of-pocket costs.
Another way of looking at that $215,000 number, says Fidelity, is to consider that a 65-year-old worker with a $60,000 salary who retires at the end of 2007 "should expect that 50% of his or her pre-tax Social Security benefit will be used to pay for personal health care expenses in the next 16 to 18 years."
An even longer-running study, the Retirement Confidence Survey (RCS), found that many workers' consciousness has been raised on retirement issues, but they are still resisting taking steps that would help them actually be better prepared financially for retirement. This is the 17th year for the RCS, which was released in early April and is sponsored by the Employee Benefit Research Institute and Matthew Greenwald & Associates, and underwritten by The Principal.
