$280K Is What a Couple Retiring This Year Will Need to Cover Health Care

This is up 2% from last year—and 75% from 2002, when Fidelity began estimating health care costs in retirement. 

A 65-year-old couple retiring this year will need $280,000 to cover health care and medical expenses throughout their retirement, according to Fidelity Investments. This is a 2% increase from 2017—and a 75% increase from Fidelity’s first estimate in 2002.

Fidelity says the cost breaks out to $133,000 for men and $147,000 for women, primarily because of their expected longer lifespans.

“Despite this year’s estimate remaining relatively flat, covering health care costs remains one of the most significant, yet unpredictable, aspects of retirement planning,” says Shams Talib, executive vice president and head of Fidelity Benefits Consulting. “It’s important for individuals to educate themselves and take steps while working to ensure they are prepared to address these costs. Otherwise, people risk having to dip into more of their savings than originally anticipated, potentially impacting their overall retirement lifestyle.”

Fidelity says the 2% increase is the smallest annual increase since 2014. Fidelity says that its estimate is based on a couple retiring at age 65. However, for those who retire earlier, the costs will be higher, Fidelity says.

A recent Fidelity poll of 1,000 people between the ages of 50 and 64 who had retired within the last three years found that 56% retired earlier than they had hoped. Thirty percent said they had retired earlier either due to their own health issues or those of their spouse or partner. Nearly all said they had some form of health insurance to cover expenses until they were eligible for Medicare, but 36% were paying $500 or more a month for this insurance.

When these early retirees were asked how they were paying for out-of-pocket premiums, co-pays and deductibles, 49% said they were using their personal savings. Twenty-four percent were relying on Social Security income, 15% retirement savings, and 14% health savings accounts (HSAs).

Forty-six percent thought they would need less than $100,000 to cover health care expenses in retirement, and 33% said they had no idea how much this could cost.