Northeast Planning Associates, Inc.

121 Shattuck Way, Suite 16,

Newington, NH 03801

Estimates of Health Care Costs in Retirement

January 21, 2016

When helping clients plan, one aspect that is becoming more and more important is planning for health care costs. One question I get asked often is: “How much should I plan to spend on Medicare and other health care costs in retirement?”

A rule of thumb we use for health care costs in retirement is a monthly cost of $500 per person. This estimate includes Medicare Parts A, B, D, any supplement plan, as well as out of pocket expenses.

This $500 per person, per month figure comes from a study done by Fidelity Investments, which estimates that a 65 year-old couple would need a lump sum of $245,000 to cover future costs of health care. Assuming 21 years of retirement (life expectancy of a male of 85, and a female of 87) this results in $12,250 per year or just over $1,000 per month for a couple.

Of course, each situation is different, so when you (or family members) are wondering what to expect for health care costs in retirement, I am always happy to be a resource.