Retirees Said to Need $200,000 for Healthcare

An American couple that retires at age 65 will need, on average, $200,000 in retirement to cover out-of-pocket medical costs, according to a study released Monday.

That amount, considered the largest single expense for most people in retirement, increased 5.3% from $190,000 last year, according to Fidelity Investments.

The increase mostly resulted from the rising cost of healthcare and has averaged 5.8% a year since Fidelity began releasing the estimate in 2002.

Fidelity has found that most people don’t take healthcare into account when planning for retirement, and that the number of companies offering health benefits to retirees is declining.

Healthcare costs have the potential to significantly erode retirement savings, said Brad Kimler, a senior vice president of Fidelity Employer Services Co., a division of Fidelity Investments.

The amount people will need in retirement to cover out-of-pocket health costs will vary with individual medical needs.

The healthcare cost estimate assumes that retirees do not have employer-sponsored retiree healthcare. It includes three typical costs: expenses associated with Medicare Part B and D premiums; Medicare cost-sharing provisions such as co-payments, coinsurance, deductibles and excluded benefits; and prescription drug costs.

It does not include expenses such as over-the-counter medications, most dental services and long-term care.