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New Study: Retirees Need $130,000 Just to Cover Health Care

A new study from Fidelity Investments claims that “today’s 65-year-olds can expect to spend an average of $130,000 on health care during their retirement, from premiums to co-payments to eyeglasses.”

The average single 65-year-old woman can expect to need $135,000 to spend on health care in retirement, while a man will spend $125,000, according to Fidelity. The difference is that a woman is expected to live 20 years longer than a man on average.

It had been looking as if health care costs were holding steady, but Fidelity now says couples need to set aside a record $260,000 for Medicare premiums and all other out-of- pocket medical costs. That’s up 6 percent from last year and 18 percent from 2014.

The reasons for this are rising costs for prescription drugs, especially high-
priced specialty drugs. What’s more retirees are using more health care in these days of a recovering economy.

It should be pointed out that these estimates are only averages, and people’s costs can vary widely, according to where they live and how healthy they are. The study assumes that retirees are covered by Medicare and the estimates on these out-of-pocket costs are for items not covered, such as premiums, co-pays, hearing and vision exams.

Further, the Fidelity report states. “The estimates also don’t include long-term care, the sometimes-astronomical costs of home health care or nursing homes that aren’t covered by Medicare. Long-term care insurance is available but expensive. Although premiums vary greatly, Fidelity estimated that a retired couple would need to pay
an additional $130,000 for a policy offering an inflation-adjusted $8,000 per month for

long-term care over three years. (It did not examine the cost of a policy for a single person.)”

Obviously, many retirees simply cannot afford these costs and one of the options is to spend their assets and go on Medicaid.

We have recently written a number of articles about long-term care costs becoming the single expense that can most jeopardize a person’s life savings. The good news is that there are other ways to avoid complete impoverishment and obtain long-term care assistance, especially if you start early enough. Understand there is no simple plan that fits all. Everyone’s situation is unique. For that reason, it’s wise to schedule a visit with us at the Stinson Law Firm. We have years of experience working with people to secure their futures to possibly avoid a financial crisis in later years.

 

Our goal at Stinson Law is to secure your present and future and leave you with the peace of mind you deserve. Contact us today.

 

Jeff is Certified as an Elder Law Attorney (CELA) by the National Elder Law Foundation, a distinction held by only a handful of lawyers in Indiana. For almost 20 years, he has focused on elder law, estate planning, long-term care planning, Medicaid planning, Veterans Affairs benefits planning, special needs planning, guardianships, and estate administration.

Jeffery D. Stinson, Certified Elder Law Attorney
Jeff is Certified as an Elder Law Attorney (CELA) by the National Elder Law Foundation, a distinction held by only a handful of lawyers in Indiana. For almost 20 years, he has focused on elder law, estate planning, long-term care planning, Medicaid planning, Veterans Affairs benefits planning, special needs planning, guardianships, and estate administration.