MarketWatch.com:By Elizabeth O'Brien <\/p>\n
People planning for retirement tend to budget for the fun stuff, like cruises with grandkids or golf trips in the Sunbelt, and ignore the less fun stuffespecially the costs of post-retirement health care. <\/p>\n
And when boomers find out how much theyre likely to need to cover those medical coststypically, about a quarter of a million dollars, the experts saythey might wish they hadnt asked. All those plans for cruises go out the window if you dont have adequate coverage, said Alexis Abramson, a New York based gerontology expert. But understanding what kinds of costs and calculations lie behind that number can make it less intimidating, and help you prepare. <\/p>\n
Fidelity Investments, which oversees some 12 million 401(k) accounts, has been a bellwether in setting expectations on this topic. This spring, for example, it released a study saying that an average 65-year-old couple retiring in 2012 would need to have saved up $240,000 to pay for out-of-pocket health-care costs in retirement. <\/p>\n
And thats $240,000 in todays dollars, so a couple retiring in 10 years would need the inflated-adjusted equivalent in the year 2022. (In its 11 years of doing this study, Fidelity has found the rate of health-care inflation to average 6% per year; assuming that rate stayed constant, a 2022 retiree would need about $430,000 set aside.) <\/p>\n
Some experts arent comfortable with using a number like Fidelitys as a benchmark. A single number can be misleading in this context, said Paul Fronstin, director of the health research and education program at the Employee Benefit Research Institute (EBRI): If you plan to be average, you have a 1% chance of being right. <\/p>\n
Still, Fronstin and other critics say it helps to have a starting point when it comes to figuring out retirement health-care costs. (EBRI put out its own series of estimates last month that segmented retirees based on their drug expenses.) If nothing else, such numbers drive home the point that Medicare doesnt cover everything. <\/p>\n
In fact, of all the money spent on health care for people 65 and over, Medicare accounts for just 59%, according to an EBRI analysis of actual expenditures; out-of-pocket spending covered 13% and private insurance paid for 14% (the rest was covered by Medicaid and other sources) <\/p>\n
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Health - care bill in retirement: $240,000<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" MarketWatch.com:By Elizabeth O'Brien People planning for retirement tend to budget for the fun stuff, like cruises with grandkids or golf trips in the Sunbelt, and ignore the less fun stuffespecially the costs of post-retirement health care. And when boomers find out how much theyre likely to need to cover those medical coststypically, about a quarter of a million dollars, the experts saythey might wish they hadnt asked. All those plans for cruises go out the window if you dont have adequate coverage, said Alexis Abramson, a New York based gerontology expert Continue reading