Health care costs in retirement are a critical financial planning consideration. An Employee Benefit Research Institute (EBRI) study found that a couple retiring today would need $295,000 to cover premiums for health insurance and out-of-pocket expenses during retirement. This figure assumes a life expectancy of 82 for men and 85 for women and that retirees had access to retiree health benefits but paid the full premium. If the couple lives to age 95, they could need as much as $550,000. These estimates do not include the cost of long-term care expenses or health care costs for retirement before age 65 for early retirees, nor do they assume any reduction in Medicare payments, although it is likely that benefits could be reduced at some point in the future.
For further information, see
Fronstin, P. (2006, July). Savings needed to fund health insurance and health care expenses in retirement. Washington D.C.: Employee Benefit Research Institute. www.ebri.org/publications/ib/index.cfm?fa=ibDisp&content_id=3650.
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