Retiring Early? Pony Up $51,000 Extra for Health Care, Fidelity Says

Are you and your spouse thinking about retiring early? Doing so can cost you, as a couple, an extra $17,000 a year in medical costs, according to a Fidelity Investments analysis.

Medical invoiceThe Boston-based investment company compared the projected average health care costs of couples retiring this year at age 65 with those of couples retiring as early as age 62 and as late as 67. It assumed they would have Medicare coverage at 65, although the analysis doesn’t include costs for nursing home and long-term care.

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Couples retiring early face the added expenses of insurance premiums before Medicare kicks in as well as other out-of-pocket costs, Fidelity says. By retiring three years early, at 62, these added expenses total $51,000. Meanwhile, those who delay retirement until 67 can expect to save $10,000 a year.

Each year Fidelity calculates the cost of out-of-pocket medical expenses in retirement for couples exiting the workforce at age 65. This year these couples can expect to spend an average of $220,000 on medical expenses – unchanged from 2013. Again, this figure is above and beyond what Medicare provides.

Health care costs have moderated in recent years, according to Fidelity. That’s partly due to changes in prescription drug coverage under Medicare Part D, slower Medicare spending and more cost-conscious consumers choosing fewer elective procedures, the company explains.

Of course, these are averages, and an individual’s health determines whether he or she will have to shell out big bucks or can get by with a couple of aspirin and vitamins.

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AARP last year unveiled a Health Care Costs Calculator to help people project medical expenses based on their personal health.

For example, a 60-year-old woman retiring five years from now in Florida with high blood pressure and mild cases of asthma and arthritis can expect medical costs totaling $383,302 by age 90, according to the calculator. Medicare picks up most of that, although her share of the cost is expected to be $125,310.

The AARP calculator also gives tips on how to manage health care problems.



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eliza61nyc 5pts

Jeez, just once can we get a story of some one retiring early that is not doom and gloom.  My brother and sil both retired when they were 60.  They are not eating cat food, they are not paying millions of dollars in health care.  granted both are pretty healthy, they watch what they eat and exercise maybe three times a week through activities they love.

they travel as much as they did prior to retirement (generally 1 big trip a year with a lot of smaller trips). 

In a nutshell they are maintaining the same lifestyle they did pre-retirement.

Come on AARP, just one article.

ah20702274 5pts

This is just one many dozens of pieces I've seen like this written by liberals trying to talk people into delaying social security. That is what this is all about: talk middle and upper middle class people into leaving the money for the non-contributors. Don't fall for it. If you can retire at 62, do it and take the money. If you are afraid of running out of money, realize that retirement is not as expensive as you think. No more commuting, eating out with the colleagues, etc. You can also cut your expenses considerable if you are smart. Staying fit is obviously the most important as it will keep you healthy, happy, and limit healthcare costs. I would also look at limiting driving/car costs as they are a real killer in this country. You are probably spending way too much on auto insurance, first off...I would look to spend no more than $25 on car insurance (check Insurance Panda). Your gas/fuel costs are probably thru the roof too. For that, check out the GasBuddy app. It usually helps me fill up my gas tank for less than $20. The elderly aren't usually as high-tech as young people, so chances are they don't know about these services. That is what is best for most people. 

You have to live to be over 80 before you'd start to see a benefit from waiting. Since the government knows the average life span is less than that, liberals know to trick contributors into delaying benefits.

InsertCleverNameHere 5pts

@ah20702274 Liberals are trying to trick us into retiring later?  How is that worse than conservatives calling Social Security and Medicare "entitlements" and trying to reduce the benefits of both programs or simply do away with them?