The 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.
Also of Interest
- Medicare Overpays $6.7 Billion for Patient Evaluation Services
- Social Security Changes in 2014
- Fight Fraud and ID Theft With the AARP Fraud Watch Network
- Join AARP: Savings, resources and news for your well-being
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