Are You Saving Enough for Health Care in Retirement?

Doctor with patient

You’ve heard this before, I know, and yet it remains as disturbing as ever. Health care costs, along with housing, are likely to be your biggest expenses in retirement. Boston-based  Fidelity Investments found that premiums, deductibles and other out-of-pocket expenses could cost a 65-year-old couple retiring today a jaw-dropping $220,000 – and that’s in addition to Medicare premiums.

Some boomers are heeding that forewarning: In a survey of 1,002 workers age 50 and older, 62 percent say they’re socking away money for their expected health care costs in retirement. But 38 percent say they aren’t saving anything for those expenses and 44 percent say they have no plans to do so in the future, according to the  AARP survey released Wednesday.

>> 8 Things You Need to Know About Medicare

Among the most common reasons respondents gave for not saving: They couldn’t afford it, they were paying other expenses or they were helping to support others. As many as 55 percent say they fear they won’t be able to afford their medical expenses in retirement.

“Even though these costs can have a significant impact on retirement savings, families and individuals often struggle to save what they need because they are paying other necessary expenses or helping to support other family members,” Debbie Banda, AARP vice president for financial security, said in a statement. However, “thinking that your health care will be paid for by Medicare alone or avoiding health care planning altogether are not the right solutions.”


The high cost of health care in retirement may be driving some 57 percent of those polled to say they plan to work past age 65, the survey said.

>> Quiz: Retirement Health Care Costs

To help figure out your expenses, AARP offers a free Health Care Costs Calculator that shows you what your out-of-pocket health care costs could be in retirement, based on certain medical conditions. You punch in your data — your current age and weight, the age at which you expect to retire, the number of years you expect to live in retirement and the medical conditions you think you might face, such as hardening of the arteries or high blood pressure, for example.

The calculator taps into a database of 82 medical conditions, and $136 billion in corresponding health care claims, to estimate the health care costs that are covered by Medicare Parts A, B and D — and the amount you’ll pay out of pocket. The tool also shows you how making small lifestyle changes, like losing weight, can lower your predicted costs. And it offers possible next steps for pursuing your goal.

>> Get discounts on financial services with your AARP Member Advantages.

“When faced with future health costs, many people are either overwhelmed or overconfident,” Banda said. “The more you know and plan for you and your family’s health care, the better off you will be in the long run.”

Photo: Monkey Business Images/iStock

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