A Fidelity news release said the figure has skyrocketed by 50% since the $160,000 estimate issued in 2002.
Fidelity said the jump in the retiree health care cost estimate from 2008 to 2009 can be attributed to a number of factors including higher costs (e.g. for doctor’s visits, diagnostic tests); increased expenses associated with new technology; and general price inflation (see Retiree Health-Care Costs Up 4.7% in 2008 ).
“American households, already under strain from the difficult economy, are facing another challenge to their financial security in retirement as medical costs continue to rise steadily,” said Brad Kimler, executive vice president of Fidelity’s Consulting Services business, which calculated the retiree health care cost estimate, in the announcement. “With employee-sponsored retiree health care coverage on the decline nationwide, it is imperative that today’s workers begin to set aside money themselves for medical expenses in retirement as part of their overall retirement strategy.”
The announcement said the 2009 figure continues to assume individuals do not have employer-provided retiree health care coverage, but do qualify for the federal government’s insurance program Medicare. It also assumes life expectancies of 17 years for a male and 20 years for a female
The Fidelity estimate takes into account cost-sharing provisions (such as deductibles and coinsurance) associated with Medicare Part A and Part B (inpatient and outpatient medical insurance) and considers Medicare Part D (prescription drug coverage) premiums and out-of-pocket costs, as well as certain services excluded by Medicare.
The estimate does not include other health-related expenses, such as over-the-counter medications, most dental services and long-term care.