New research from Fidelity forecasts the average 65-year-old couple will spend $300,000 on healthcare in retirement, while the 2021 estimate for singles is $157,000 for women and $143,000 for men. This year’s estimates mark a new record high, up 30 percent from a decade ago.
“Health care is creating a ‘retirement cost gap’ for many pre-retirees,” says Steve Feinschreiber, senior vice president of the Financial Solutions Group at Fidelity. “Many people assume Medicare will cover all your health care costs in retirement, but it doesn’t. We estimate that about 15 percent of the average retiree’s annual expenses will be used for health care-related expenses, including Medicare premiums and out-of-pocket expenses.”
Fidelity offers several tips to prepare for rising healthcare costs, including opening a Health Savings Account. “An HSA can help you save tax-efficiently for health care costs in retirement,” says Fidelity. “You can save pretax dollars (and possibly collect employer contributions), which have the potential to grow and be withdrawn tax-free for federal and state tax purposes if used for qualified medical expenses. Read more.
Fidelity: Projected Healthcare Expenses Reach Record High
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