fact, most employees only pay around 25% of their actual health care premium
costs, while employers pick up 75%. In their first year of retirement, for
comparable coverage, they will have to pay out of pocket costs around three
times what they paid as employees,” adds Mastrogiovanni.
white paper quantifies the retirement health care costs saving gap between what
has been saved using an IRR and what will be needed to cover projected health
care costs. It shows that a healthy 45-year-old male earning $50,000 and planning
to retire at age 65 using an 80% IRR will face a shortfall of $127,299 in
retirement health care costs.
individual would be able to close this gap with additional annual contributions
of $3,460 a year, or with a 50% company 401(k) match, an additional $90 per two
week pay period. For a 55-year-old, eliminating the savings gap requires a $25,679
lump-sum investment or an annual additional contribution of $3,291 or $84 a pay
additional contributions to 401(k) plans, HSAs, Roths, annuities, or other
products such as life insurance can help close this gap to reduce, or possibly
even eliminate, the impact of unexpected health care costs in retirement,” says
The paper is available here.