Rising Health-Care Costs Threaten Retirees’ Financial Security

Fidelity Investments now projects that a 65-year-old retiring this year will spend $185,500 on health-care and medical expenses throughout retirement. The figure reflects a 7.5 % increase from Fidelity’s estimate a year earlier and is more than double the inaugural 2002 estimate. The projection assumes enrollment in Medicare Parts A, B and D and includes premiums, copayments and other out-of-pocket costs for medical care and prescription drugs.

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Roughly 4 million Americans turn 65 each year through 2027, creating a large influx of new Medicare beneficiaries. Fidelity attributes the cost rise to higher prices for care, greater utilization, and rising expenses tied to chronic conditions. A separate analysis for the Health and Human Services Department estimates that 56 % of people turning 65 between 2021 and 2025 will need some form of long-term care during their lifetime. Consulting firm Milliman earlier this year suggested that 65-year-olds should set aside $135,000 for future paid long-term-care costs.

The Hill

More than half of pre-retirees (54 %) incorrectly believe Medicare will cover all health expenses. The West Health-Gallup Center on Healthcare in America reports that nearly 1 in 4 U.S. workers—about 23 million adults—remain in jobs they would rather leave because they fear losing health insurance.

The Hill

Steve Betts, head of Fidelity Health, emphasized that while Medicare is a critical component of retirement health coverage, it does not eliminate every health-care expense. Fidelity’s estimate deliberately excludes long-term-care costs, which can accumulate quickly for retirees who eventually require such services.

The Hill

• “Medicare is a critical part of retirement health coverage, but it does not eliminate every health care expense,” — Steve Betts, head of Fidelity Health

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