What You Need to Know
- Fifty-eight percent of workers surveyed had spent little or no time thinking about what they need to cover in retirement.
- With some planning, saving enough is an attainable goal, Fidelity said.
- The cost estimate illustrated the benefits of maximizing HSA savings.
A 65-year-old, opposite-gender couple leaving the workforce in 2021 can expect to spend $300,000 in health care and medical expenses through retirement, a new high, according to Fidelity Investments’ latest retiree health care cost estimate.
For single retirees, the 2021 estimate is $157,000 for women and $143,000 for men.
This year’s estimate is up 30% from 10 years ago, when the amount was $230,000, but up just 1.7% from 2020, as health care inflation has remained relatively flat over the last few years, according to Fidelity.
Fidelity’s estimate has skyrocketed by 88% since it began measuring health care costs in 2002, when its first estimate was $160,000.
“While this past year has certainly made protecting our health today a priority, we need to do the same when planning for future health care needs,” Hope Manion, senior vice president for Fidelity Workplace Consulting, said in a statement.
“By providing this estimate for retirees, we want to increase awareness among people of all ages to help them proactively get more engaged in saving and investing, so they can be better prepared in years to come.”
Broader awareness is much needed, Fidelity noted, as 58% of current employees in the firm’s survey from earlier this year said they had spent little or no time thinking about what they need to cover in retirement.
Even among those who have put some thought into the matter, half believed they would need $50,000 or less to meet health care expenses.
Fidelity’s estimate assumes that both members of the couple are enrolled in traditional Medicare, which between Medicare Part A and Part B covers expenses such as hospital stays, doctor visits and services, physical therapy and lab tests, and in Medicare Part D, which covers prescription drugs.
Saving $300,000 and Beyond
Fidelity said its estimate for retirees should also be a call to action for younger Americans to start saving early and consistently, as health care costs will likely continue to rise.
And indeed, saving for both retirement and health care is on the rise. Fidelity said its own customer data, representing millions of working Americans across the country, reported high savings rates and balances across 401(k), 403(b) and IRA accounts at the end of 2020.