Study: Couple Retiring in 2012 Needs $240K to Cover Medical Expenses

By Jerry Geisel

May. 9, 2012

A 65-year-old couple retiring in 2012 without employer-provided retiree health insurance will need about $240,000 to pay future medical-related expenses, Fidelity Investments said in an analysis released May 9.

That’s up 4 percent from last year’s estimate of $230,000. The 2011 estimate was an 8 percent decline from 2010, when Fidelity reported that a 65-year-old couple retiring that year would need about $250,000 to cover future medical related expenses. It was the first annual decrease in the 10 years Fidelity had been making the projections.

That one and only decrease was driven by provisions in the 2010 health care reform law that expanded Medicare coverage of brand-name prescription drugs once retirees’ drug costs hit a certain level.

“Today’s workers must understand that the cost of health care is expected to continue rising significantly in future years,” Boston-based Fidelity Executive vice president Brad Kimler said in a statement.

Of the $240,000 needed to cover a retired couple’s health care expenses, Fidelity estimates 32 percent will go toward paying Medicare Part B and Part D premiums; 45 percent will be consumed by expenses not covered by Medicare, such as coinsurance and deductibles imposed by Medicare; and 23 percent will be spent on out-of-pocket prescription drug expenses.

Jerry Geisel writes for Business Insurance, a sister publication of Workforce Management. To comment, email

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Jerry Geisel writes for Business Insurance, a sister publication of Workforce Management.

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