Retired Couples Need $240,000 Just To Cover Health Care Costs

If you and your loved one are looking down the road toward living out your golden years together, be prepared to have a pile of cash stashed away to cover your medical bills.

Fidelity Investments has released its annual projection on health care costs for retirees and calculated that a couple retiring now will need $240,000 to get through their remaining decades. That’s an increase from last year’s projection of $230,000.

The bank had cut the number for the 2011 report, citing portions of the Affordable Care Act that should reduce seniors’ out-of-pocket expenses for prescription drugs. But Fidelity says medical costs are still going up, thus the rebound from last year’s unprecedented dip.

“As long as health care cost trends exceed personal income growth and economic growth, health care will still be a growing burden for the country as a whole and for individuals,” says Sunit Patel, a senior vice president for benefits consulting at Fidelity.

A bit of a silver lining: The 4% year-over-year increase is less than the average 6% yearly increase the Fidelity reports have shown since 2002.

Retired couples may need $240,000 for health care [AJC.com]

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  1. Cat says:

    tl;dr version:

    You’re fucked.

    • travel_nut says:

      Cat tells it like it is.

    • Blueskylaw says:

      Short, sweet and to the point.

      I love it.

    • crispyduck13 says:

      “A bit of a silver lining: The 4% year-over-year increase is less than the average 6% yearly increase the Fidelity reports have shown since 2002.”

      When I read that last sentence I immediately thought “Oh well that’s great, I’m 2% less fucked then.

  2. Blueskylaw says:

    “As long as health care cost trends exceed personal income growth and economic growth”

    There is the problem. The health care and insurance companies are in no dire straits with these new laws and they still reap massive profits. They are raising rates because they can, just like the oil companies. If your life is on the line you will pay first and fight later and these companies know that.

  3. bhr says:

    Something to keep in mind when reading this…

    “The projections are part of Fidelity’s benefits consulting business. “

    This is a company that makes money by getting people to invest in retirement saying that retirement costs are expensive.

    Basically they are saying that 40 years of retirement (2 65 year olds living until they are 85) cost an average of $6k/year. While that number is scary, especially for people never invested/have low SS benefits, it doesn’t strike me as being ridiculous.

    • cowboyesfan says:

      Cut out the last few months of life and it’s probably a lot less. End of life care is where the majority of cost occurs.

      • Not Given says:

        Too true. I for one hate medical stuff being done to me. If I’m going to die in less than 5 years anyway, or some disease they want to treat only has a good outcome 50-60% of the time and there is stuff like surgery and chemo involved, I’m ready to go. I’m not putting up with horrendous things for a few months of extra misery.

    • PunditGuy says:

      Bearing in mind where the advice comes from is always important. I’ve used retirement calculators that tell me I need anything from $400K to $2.4 million — with all the high-end estimates coming from asset management firms and the low-end estimates coming from general news sites.

  4. Hi_Hello says:

    that’s 500 bucks a month for two people for if they lived another 40 years after the retirement.

    that’s about 250 a month per person. That’s not bad.

    I wish I can get my mom health insurance for $250 a month so she can retire now and not work just to have health insurance.

    • huadpe says:

      That’s 250 a month on top of medicare, so it’s 250 a month, given that you have health insurance already.

      • Hi_Hello says:

        oooooooooooooohhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhh

      • Bsamm09 says:

        They are counting Medicare since you do pay for it through SS. From the article:

        “The estimate factors in the federal program’s premiums, co-payments and deductibles, as well as out-of-pocket prescription costs.”

        • huadpe says:

          They’re counting the out of pocket component of medicare, not the part the government paid for. Medicare doesn’t pay for 100% of someone’s healthcare, and they estimate the balance to be about $250 a month on average (though the median month would be less than that).

          • Bsamm09 says:

            I mean’t that they are including the premiums that you pay for Medicare which are paid through SS deductions. I could be wrong.

    • bluline says:

      Living 40 years after retirement would put most people over 100 years of age.

  5. chucklebuck says:

    They should just go ahead and rename “retirement” to “death”.

  6. Matthew PK says:

    $240,000 is not “too much” to consider “life’s savings”

    • bennilynn says:

      When my mother started working as a teacher in NYC in the mid-60’s, she made around $6000 a year. Even though she put away a respectable amount for retirement, it still wasn’t nearly enough. $240k might not seem too bad if you’re thinking in today’s wages, but today’s retirees weren’t earning those kind of wages.

      Anyway, $240k is just for healthcare costs, not housing, food, or transportation.

      • Matthew PK says:

        If your mom had saved money then her investment value would have grown along with her wage… that’s how interest works.

        As for “costs of living” we have a small, poorly-run government pension system… Perhaps the working family should help support their grandparents more directly?

        • bennilynn says:

          Yes, because investment accounts are doing so well. It’s not like the banking industry gambled all their capital away by bundling up bad debt so it looked like a good value, tied that bad debt to retirement investment accounts, and subsequently destroyed the entire economy, taking everything down with it.

          Again.

          So, yeah, even investing a good amount into safe retirement options is really no guarantee.

          • Bsamm09 says:

            Investment accounts are doing bad? Was she investing in Leveraged Inverse ETFs?

          • Matthew PK says:

            I don’t know if you realized this or not but the stock market is today where it was before the 2008 crash.

            Nonetheless, you could certainly invest in risk-averse things like T-Bills and still get interest.
            You’re just making excuses not to save money.

            • failurate says:

              I know for some it is hard to remember, but for older working folk, the 2008 crash isn’t the only one they have to recover from. The market plunged in 2002 also, and quite a few people lost a substantial amount of their retirement funds. Those accounts didn’t really recover until 2007, only to be hit again.

              Those two crashes are keeping old folks in the employment pool, further dragging down the economy.

      • suez says:

        I’m sorry, I’m earning a very good wage now (mid 60s) and $240,000 is STILL a mind-boggling amount. Not when I live alone on a single income and can’t afford to put more than 6% into my 401k. I am so screwed!

        • tiatrack says:

          Depends on where you live. My husband and I both make about that much, and we BOTH put in 25% each month. This is after we pay our $1,500 per month in student loans and our $1,500 a month mortgage, so it’s not like we’re debt-free. I bet you could easily put more in if you cut back on other expenses (assuming you’re not in a really expensive city like NY or LA).

        • Matthew PK says:

          You need to address your lifestyle. $240,000 is not an insurmountable figure when it’s what you *should be saving throughout your entire life to sustain your retirement*

          Saving just $6000 per year at 5% interest yields $240k after 20 years.
          Saving just $4000 per year at 3.2% interest yield 240k after 30 years.

          In the early 2000’s the middle class got a tax cut between 3 and 5 percent… How many people do you think increased their savings by the amount of their cut? I’d guess that most people increased their *spending* instead.

          • suez says:

            My condo fees doubled in the 10 years I’ve lived there. I faced two seperate expensive medical situations that were both excluded from my insurance coverage. I bought a lemon of a car and so had to keep paying on it even after I’d gotten another one. My property taxes went up, my salary stagnated, and my hours increased without compensation. What was in my 401k suffered a severe depletion due to Wall Street crashing, and interest rates right now are a joke. Tell me how much I should be saving again?

            • Cor Aquilonis says:

              Well, I say it’s your own fault for being unwilling to live in poverty, like I do, to afford a dignified old age. After all, you’re squandering your money on luxuries like a condo and healthcare. Better slow it down, spendy-spenderson. Remember, it’s your personal responsibility that the economy tanked and the market nuked your 401(k) and that your condo association raised fees and that your income is stagnant. Take personal responsibility!

              /s

              On a more serious note, new research suggest that people should be saving between 10%-15% of their income for retirement: http://wpfau.blogspot.com/ (He’s a researcher who’s published a lot of recent papers on the subject.) Good luck everyone!

          • magnetic says:

            This number is on top of the other retirement savings.

  7. mopman64 says:

    Why worry, Obama care will take care of it all. That’s why I am pissing my money away like a drunk sailor. Live off the gov. That’s want Obama wants us to do.

  8. BettyCrocker says:

    What, exactly, is going to happen as we all age? People are living paycheck to paycheck as it is and going without healthcare NOW. Will it just come down to never retiring and the majority of the population working until the day they die? Even that isn’t realistic. What will happen to these people? Will we let them all become homeless and die if they can’t be taken in by a family member? Or will they become a burden on society?

    It strikes me as odd that the requirements needed as we become elderly are becoming so unrealistic in today’s world, for a very large portion of the population, and there seems no agreeable solution for it.

    If you didn’t start saving for retirement in high school, and keep saving all along having a well paying job, and never suffering any sort of financial difficulty, you may have a chance. That’s not me and that’s not the majority of people I know either.

    • cowboyesfan says:

      If people can’t afford healthcare, prices will fall.

      Empty hospitals are expensive to maintain.

      • Such an Interesting Monster says:

        Hospitals full of people without insurance are even harder to maintain.

    • crispyduck13 says:

      I think about this a lot. Personally I think people our age now wouldn’t recognize the system in place when they are retirement age. Baby boomers have it pretty good, I guess, but the generations after…it’s hard to imagine what it will take to make retirement “golden years” again.

    • Gorbachev says:

      Exactly.

      This country will be FILLED with elderly living in poverty and homeless.

      I predict suicide rates are going to go through the roof.

      But since their children will not look idly by when they fall deeper and deeper into poverty, a large percentage of the elderly will be financed by their children. Demand for anything other than essentials, drugs and medical services will, as a consequence be much lower. Drug companies will reap the benefit, every other market sector will be crippled by demand that’s several percentage points lower than the population numbers would normally support.

      And not a single legislator will intervene, because drug companies shovel millions of dollars into their campaign funds.

      Personally I will have moved to a developed country before this. I hope.

  9. Such an Interesting Monster says:

    I’m not sure I fully understand. Considering Medicare covers 80% of pretty much everything most seniors have it pretty good when it comes to healthcare. And considering that $240K is for 20 years AND a couple, that works out to $500 a month, at least according to them. Which still ain’t too bad.

    • The Cosmic Avenger says:

      “…most seniors have it pretty good when it comes to healthcare.”

      So….you don’t actually have any family or close friends over 65, do you?

  10. Harry Greek says:

    Remember, if you can afford private healthcare, you don’t deserve it.

    And, there shouldn’t be any social medical treatment,… because the communists will win,… somehow, by ensuring sick and old people don’t suffer. We can’t support those who can’t support themselves!! This is ‘MURICA!!!

  11. kent909 says:

    When I was young back in 1965 our family doctor still made house calls. Well those days are certainly gone. Not to challenge capitalism, but the day healthcare primarily became a way for people indirectly involved in the process, to make money was the day affordable healthcare was doomed. My doctor would come to the house and he would send a bill at the end of the month and my parents paid it. The doctor had an administrator to handle this part of the business. Simple. Now doctors have formed partnerships and think by sharing common functions between the doctors they have streamlined the system. It just became more complicated. You also have third party billing companies that exist between the doctors and hospitals that only provide a way for the insurance companies and the hospitals and doctors to process payments. Add to that you have software companies that write all the software that enables the process to become a tangled ball of twine. The conditional logic of these software programs is a joke. It no longer is patient A and patient B received the same treatment, therefore the changers will be the same. It gets convoluted. Patient A is with HMO X and is over 45 years of age, and had a preexisting related condition four years ago that means they fall into a different class of patients that carries a whole different payment schedule than patient B. I almost forgot that patient B came in on a Tuesday and now that means a whole different scenario. There have been studies done that show that 80% of jobs exist just to maintain and facilitate the “bigger, better, faster” need for growth and expansion of the “machine”. You get sick, you go to a doctor. He charges you for his time. Simple. Lets leave the other 45 people out of the process and save some money.

    • Not Given says:

      The doctors here used to have one nurse that did everything including billing. Now each doctor has a couple of nurses, a couple of office people for record keeping and answering phones, etc. and hire a outside firms to do the billing/insurance paperwork, IT stuff and the accounting.

    • ARP says:

      There’s a lot of factors at play. Back then the cost of medical school was much lower, so a doctor didn’t have as much debt when they graduated, requiring them to charge high fees. We also didn’t have the same cancer and disease treatments that we have now, which are expensive. Back then, when you got cancer, you would likely die from it within a few years.

  12. lovemypets00 - You'll need to forgive me, my social filter has cracked. says:

    I read this in the paper last night and thought yay, just one more thing I won’t have when I’m old. I make enough money to get by. I save what money I can, but realistically, even if I put back all my take home pay for the rest of my life, I’d never have enough money to retire according to the experts. That, coupled with the fact that interest rates are practially non existent now, means that the money I do manage to save won’t grow much.

    My only hope is to join the Red Hat Ladies and be a greeter at WalMart. At least I’ll be in out of the rain and cold for part of the day.

  13. MrObvious says:

    Maybe on average, but if you keep yourself in prime physical shape like I do by eating healthy and working out your average costs won’t be anywhere near this. It’s too bad society is so lazy, and virtually all obesity problems could be prevented with a simple dose of will power.

    • crispyduck13 says:

      Right, because healthy people who work out never get cancer, or have heart attacks, strokes, aneurysms, crippling arthritis, severe injuries from a car accident or fall.

      What the hell are you doing sitting on your ass using a computer to comment on a blog anyway Mr. Healthy? Get outside and give me 50 before you turn into a lazy obese slob.

    • Loias supports harsher punishments against corporations says:

      Says who? My grandfather was fit, healthy, and took care of himself. He died at least 20 years before he should have, of prostate cancer. And that’s ust a single anecdotal example.

      For a name like MrObvious, you sure are ignoring a whole host of obvious reasons why perfectly healthy people will need significant insurance care later in life.

      • MrObvious says:

        Yeah and dieing quickly doesn’t cost $240,000, it is the years and years of treating chronic illnesses that could mostly be prevented that do.

        • crispyduck13 says:

          Hey MrObvious – I’m going to guess you’re not a doctor, so stop making assumptions about how much dying “quickly” costs. Also, invest in spell check, or you know – Google.

          • MrObvious says:

            consumerists does not support spell check. You should advice them.

            • Evil_Otto would rather pay taxes than make someone else rich says:

              facepalm.jpg

              Sites don’t support spell check, browsers do. Try using something newer than IE6.

    • Hi_Hello says:

      not sure why people didn’t like your comment. Health care cost is base on the majority of people. If the majority of people have a healthy lifestyle, cost would go down.

      Every health problem in this country is treated with a pill, which cause side affects, which is treated with another pill.

  14. AllanG54 says:

    Retirement….retirement….I’ve heard of it but I don’t think I’ll ever experience it.

  15. YamiNoSenshi says:

    Fox Business had this story as you needed $240,000 flat to retire as a couple. I really wish I could change the lunchroom TVs.

  16. dolemite says:

    Anyone else planning on this:

    “Sorry, but it’s cancer. It’s going to cost a lot of money to get you through this.”
    “Nah.”
    “Nah?”
    “Forget it. I’ll just die.”

    • crispyduck13 says:

      Maybe it’s because my 84 year old grandfather was just diagnosed with cancer yesterday that this is especially poignant for me. The very idea that he would choose the option to just die terrifies me. Thank god he has insurance, if not he’d be fucked.

      • MaxH42 thinks RecordStoreToughGuy got a raw deal says:

        Sorry to hear about your grandfather. How are he and the rest of the family taking it?

        • crispyduck13 says:

          We don’t know what type it is yet, that kind of biopsy takes longer, so everyone is sort of left hanging for now. It’s a non-removable tumor on his hip bone, so they will do what they can to shrink it and we all hope he won’t be wheelchair bound for the rest of his life. We’ll keep on trucking on, and I find a lot of solace in the fact that he’s had a long happy life so far.

          Thanks for asking!

    • Free Legal Advice! says:

      Yes. I have a metric ton of life insurance. My kids and husband would benefit and not have to bear the cost of of the prolonged treatment.

      Actually, my grandmother did this when she broke her hip for the second time. She stopped eatting. The family had a hell of a time getting the doctors at her nursing home to respect her decision to pass away, but we did. At times, we had to form a wall around her and threaten lawsuits. In the end, she lasted about two weeks (with a broken hip still). She had plenty of time to see her kids and grandkids. I’m totally doing that, if given the choice.

      • corridor7f says:

        Money aside, I don’t want to waste away slowly in a hospital full of strangers. I’d rather just pull my own plug.

        It may come to that if my lifespan exceeds my ability to sustain myself.

    • frodolives35 says:

      I hope I have the courage.

  17. duncanblackthorne says:

    This is why I haven’t bothered saving for so-called “retirement”: If world economic collapse doesn’t hoover up any money I saved, doctor bills will suck it all dry anyway. What the hell is the point? I’m not married, don’t want to be, don’t have kids, NO ONE depends on me for anything, I have no reason to not live the way I want to live now, work until I’m dead, and screw this “saving for retirement” crap.

  18. rockelscorcho says:

    Don’t retire; die at work. Problem solved.

  19. YouDidWhatNow? says:

    I have a solution to the country’s burden on healthcare costs for the retired and/or elderly.

    1. Free booze and tobacco for all.

    Fixed.

  20. VashTS says:

    We need to overthrow the government. Plain and simple but near impossible. The citizens are either to beaten down or believe if they do nothing it will all work out in the end.

    • Talmonis says:

      The government does not control the health care industry. In fact, when they tried to do so, people lost their collective minds (due to lies promoted by said industry on allied news stations). So why would anyone want to overthrow the government? If anything I would be more in support of electing leaders who will seize control of various industries, and run them as they should be run.

  21. Scuba Steve says:

    Its good to know that my retirement fund is going to pay for the healthcare I’ll receive when I’m 60+ so I can keep working into my 70s and 80s.

    Wait, no its not. I’m moving to Canada.

  22. JohnyO says:

    Good to be a Canadian in this case.. :)

  23. eys says:

    What is this “retirement” that people keep writing about?

  24. GovernmentCheese says:

    What about long-term care insurance?

  25. rlmiller007 says:

    Where’s the vat of soylent green for me to jump into? I might as well get it over now.