Money in the Middle

Sandwich Generation Talking About Money Up, Down and Across Generations

Health Care Costs in Retirement – a whopping $240,000

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Seems like there is just no good financial news for baby boomers. 

Yesterday, Fidelity Investments released it’s annual survey of what it will cost a couple to cover their medical expenses in retirement.  They estimate $240,000 for a 65 year old couple retiring in 2009. 

And you thought Medicare would reduce your health care costs to almost nothing.   These kinds of costs come as a surprise to many as they move to retirement.  If you are helping your parents or an older  family member cover their health care costs, you know that number is not exagerated. with many companies dropping retiree health benefits, individuals are left to cover the costs of insurance out of their own pocket.

More bad news — this doesn’t include the cost of over the counter medications, dental and long-term care.  On average, long-term care in a nursing facility adds another $78,000 to the costs.

This is a good wake up call to make sure your retirement planning includes the cost of health care and that you know how much risk you want to cover and how much you want to shift to an insurance company.

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). It also considers Medicare Part D (prescription drug coverage) premiums and out-of-pocket costs, as well as certain services excluded by Medicare. You’ll want to look at covering the gaps that Medicare does not cover through a Medicare Supplement Plan or Medicare Advantage Plan.  You should also take a look at long-term care insurance to cover potential long-term care costs.  You don’t need a cadillac policy, but some coverage will help assure that your family doesn’t feel the financial burden of your care.

How you use insurance to cover health care costs depends alot upon your financial position and your tolerance for risk.  But, it’s not too soon to start thinking about this issue and get educated about what Medicare covers and what it doesn’t.


Written by Laura Rossman

March 27, 2009 at 3:56 pm

Posted in Uncategorized

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