Fidelity Investments reported Thursday that a 65-year-old couple retiring this year can expect an estimated $275,000 in health care and medical expenses throughout retirement.
Fidelity's annual analysis of retirees' health care costs represented a 6% increase over last year's estimate but a whopping 70% increase since its initial retiree health care cost estimate in 2002.
The $15,000 increase over the 2016 estimate reflects general market trends and expectations for health care costs across monthly expenses associated with Medicare premiums, Medicare copayments and deductibles, and prescription drug out-of-pocket expenses, according to the report.
It assumes enrollment in Medicare health coverage, but does not include the added expenses of nursing home or long-term care.
"With ongoing uncertainty across the health care landscape, it's more important than ever for individuals to educate themselves on steps they can take to prepare for their health care needs in retirement," Adam Stavisky, senior vice president at Fidelity Benefits Consulting, said in a statement.
"These expenses are only expected to increase in the future, so it's critical that people include health care as a significant part of their retirement plan."
Fidelity's new estimate was based on a hypothetical 65-year-old couple retiring in 2017, with life expectancies that align with Society of Actuaries' RP-2014 Healthy Annuitant rates with Mortality Improvements Scale MP-2016. The estimate was net of taxes.
The calculation assumed individuals did not have employer-provided retiree health care coverage but did qualify for Original Medicare. The calculation included cost-sharing provisions associated with Medicare Parts A and B, as well as Medicare Part D premiums and out-of-pocket costs, and certain services excluded by Original Medicare.
The estimate did not include other health-related expenses, such as over-the-counter medications, most dental services and long-term care.
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