How much money do you need to save for retirement? $100,000? $500,000? $1,000,000? $5,000,000?
Well whatever your figure is, you need to tack on an extra quarter of a million dollars in order to cover your health care costs in retirement. The Boston Globe (“Fidelity…“) reports that Fidelity now estimates that a couple will need to have saved $225,000 in order to pay for health care costs during retirement. When Fidelity initially conducted this study in 2002, the figure was $160,000, which means necessary savings for health care in retirement has increased by almost 6% per year.
You may think that Fidelity’s numbers are biased upwards since Fidelity has an interest in making people save more money (they make a commission off their investments). Boston College’s Center for Retirement Research also conducted a similar study, however, and found that a couple will need to have saved at least $206,000.
These figures are extremely high, especially considering that they take into account the fact that all of these people will be covered by Medicare. According to BC’s Center for Retirement Research currently 60% of older workers are “at risk” of being unable to maintain their standard of living in retirement.
[Hat tip to New Health Dialogue blog]