Freeman's Blog


February 9th, 2012 by

Healthcare in RetirementI want to give you some number to consider: in 2010, the present value of lifetime benefits for Medicare was about $376,000 for a 65 year old married couple. Now, because Medicare covers about half of that, does this mean you’ll need $188,000 to cover your share? Well, as much as that might seem, most experts suggest you save even more than that to cover medical expenses in retirement, especially if you don’t expect to retire for another decade. Now, how certain do you want to be? According to the employment research institute, a man will need between $244,000 and $290,000 and a woman will need between $210,000 and $406,000 in savings to have a 50% chance of affording health care expenses in retirement.

Now, this is assuming a retirement age of 65 in 2019. These estimates are for projected median savings you’ll need to pay for premiums on Medigap, Medicare part B and part D, and out-of-pocket prescription drug expenses. Since half the population will be above the median, half of you reading this blog could need more than these amounts in savings. Now, some of you will need to save more if you live longer than the average life expectancy, half above average prescription drug costs, or want greater security that you’ll be able to pay for health care.

The estimates tend to be higher for women because women have longer life expectancies. In fact, if you’re a woman that wants to be 90% certain you’ll be able to afford health care in retirement, you’ll need to save at least $377,000. You might be wondering if the health reform act will reduce the amount of money you’ll need to save to pay for healthcare. There’s a chance that it could but, of course, there are no guarantees.

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