The One Expense You’ll Need $300,000 to Cover in Retirement

Living out the rest of your years in retirement can be dreamy, but it’s important to remember that anything can happen and when it does, you’ll need to be prepared financially. 

Case in point: healthcare.

It’s expensive, and unfortunately getting even more so.

By the Numbers: According to a study conducted by Fidelity, they found that senior couples in retirement will need an estimated $300,000 to cover medical expenses. This number has jumped significantly from over the past 20 years and is expected to continue going up over time.

This figure is based on a hypothetical husband and wife who live to their projected life span and retire today at the age of 65. That $300k is a projection of the amount of out-of-pocket expenses the couple would incur, including deductibles and co-insurance for services covered by Medicare Parts A and B, as well as Medicare Part D premiums and out-of-pocket expenses.

“Covering health care costs is one of the most significant, yet unpredictable, aspects of retirement planning. 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.” — Hope Manion, senior vice president, Fidelity Workplace Consulting

By the Numbers: Following a year-plus of pandemic isolation, the bar for “financial happiness” and being “financially comfortable” are both falling. Although respondents said that it takes $1.9 million to be wealthy, financially happiness hits at $1.1 million and it only takes $624k to be financially comfortable. Maybe all that time at home led to some reordered priorities.

What’s Happening?: The cost of care is going through the roof, especially for retirees.

Fidelity’s $300,000 estimate is the highest in the 20 years that Fidelity has been calculating this figure and it’s up 30% since 2011. As of 2002, a senior couple *only* needed $160,000 for these costs. 

But the cost of healthcare is rapidly outpacing overall inflation, meaning that medical care is getting more and more expensive for all of us. 

The Real Bad News: This estimate only applies to today’s retirees. If your retirement is decades away, you are likely going to need much more than $300,000.