For those concerned they won’t have enough to live on in retirement, Fidelity has just raised the bar a little higher.
According to Fidelity’s "Retirement Health Care Cost Estimate," a couple, both aged 65 and retiring this year, could expect to spend an estimated $245,000 on health care throughout retirement, up from Fidelity’s estimate of $220,000 last year.
Oh, and for those keeping track, the figure has increased 29% since 2005, when it was $190,000.
Of course, like any estimate, it’s based on some assumptions, specifically that the hypothetical couple retiring in 2015, is 65 years old and has an average life expectancy of 85 for a male and 87 for a female. And, of course, with the caveat that those estimates are “…calculated for ‘average’ retirees, but may be more or less depending on actual health status, area of residence, and longevity,” according to Fidelity.
In other words, your actual “mileage” may vary depending on your body’s condition, optional equipment and how and where you live.
Factors boosting this year’s estimate do indeed include longer life expectancies and anticipated annual increases for medical and prescription drug expenses. While that estimate assumes enrollment in Medicare health coverage, it does not include the added expenses of nursing home or long-term care. The latter can, of course, be quite expensive, but tend to be incurred by a minority of the population (see What Long-Term Care Costs in Retirement Could Do to Retirement Readiness and Effects of Nursing Home Stays on Household Portfolios).
And for those who are depending on stock replacement ratios as a gauge for retirement readiness — it’s worth considering how those kinds of costs factor into your pre-retirement income baseline.
