Fidelity: Retiree Medical Care Will Cost as Much as House

“Medical inflation is outpacing salary increases and cost of living adjustments for many people. Until that situation changes, it is critical that individuals include health care costs in their retirement savings strategies today so they can be prepared to pay their medical bills throughout retirement,” Kimler said.

Many retirees rely on Social Security benefits as their primary source of income. For a 65-year-old couple retiring this year on a $75,000 annual household income, annual Social Security payments will be about $29,970.

Fidelity compared Social Security’s average cost of living adjustment (2.3%) against an assumed average annual increase of health care costs for retirees nationally (6%). The comparison found that 65-year-old couples retiring this year with a $75,000 household income should expect that 35% of their annual benefit (about $10,476) could be needed for health care expenses today. In 15 years, or by 2027, their allocation of Social Security benefits going to health care expenses is likely to almost double to 61% of a $41,205 annual Social Security payment, or about $25,000 a year.

“Retirees relying entirely on Social Security to fund their health care costs will be faced with difficult challenges in the future,” Kimler said. “Today’s workers should plan to supplement their retirement income to cover their medical expenses. It is never too late to begin utilizing all retirement savings vehicles available, including any 401(k) accounts, IRAs and Health Savings Accounts, to help build a more secure retirement.”