One of the big unknowns for most of us is how much money do we need to cover healthcare costs in retirement. Fidelity Investments estimates around $260,000 on average for a 65 year old couple during retirement. The Employee Benefit Research Institute has studied this question and offers more clarity than Fidelity's estimate. They found that prescription drug expenses will play a big role in determining the total expenses. A couple with lower drug expenses might need $158,000, while a couple with high drug expenses might need $392,000. These estimates typically include insurance premiums and out of pocket expenses. Importantly, they do not include expenses for long term care.
The reality of healthcare expenses for each of us is going to be affected by a couple of factors. One is whether you are a man or woman. Another is whether we have a healthy lifestyle. And finally, whether we encounter a major medical situation such as cancer, parkinsons, ms, or others.
The important thing is to factor a reasonable estimate for healthcare expenses in our retirement planning. Even though this will be just an estimate, and one that is projected out for perhaps 30 years, it's better to have evaluated some expense then blithely assume everything will be normal.
Next article: long term care expenses.
The reality of healthcare expenses for each of us is going to be affected by a couple of factors. One is whether you are a man or woman. Another is whether we have a healthy lifestyle. And finally, whether we encounter a major medical situation such as cancer, parkinsons, ms, or others.
The important thing is to factor a reasonable estimate for healthcare expenses in our retirement planning. Even though this will be just an estimate, and one that is projected out for perhaps 30 years, it's better to have evaluated some expense then blithely assume everything will be normal.
Next article: long term care expenses.
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