Survey finds Americans will need 7x more than they expect to pay for healthcare in retirement.
A 65-year-old couple retiring this year will spend on average $315,000 for healthcare expenses throughout retirement, about seven times more than they expect to pay, according to a new study from Fidelity Workplace Consulting.
Fidelity's 21st Annual Retiree Health Care Cost Estimate for single retirees is $150,000 for men and $165,000 for women. The estimate assumes both members of the couple are enrolled in traditional Medicare and Medicare Part D.
The 2022 estimate is up 5% from 2021 ($300,000) and has nearly doubled from its original $160,000 in 2002, the first year the estimate was published.
"Even as many Americans look to turn the page on the events of the last two years, staying informed on potential future healthcare costs should remain a top factor when planning for retirement," said Hope Manion, senior vice president, Fidelity Workplace Consulting.
A March survey of 2,022 adults commissioned by Fidelity found that most are clueless about the cost of healthcare in retirement, estimating that a couple retiring this year will spend $41,000 on healthcare expenses in retirement -- $274,000 less than Fidelity's estimate. Additionally, 68% think associated costs will remain under $25,000.
Fidelity is using the survey to plug health savings accounts, which Manion said "are also a great way to cover current qualified medical expenses."
Among the misconceptions harbored by many American adults ages 58-76, the survey found that:
* 57% of respondents incorrectly think a person can elect to enroll in Medicare at age 62 and receive reduced benefits. Medicare gives people a 7-month time frame to sign up/enroll. For those who are eligible when they turn 65, that 7 months begins 3 months before the month they turn 65 and ends 3 months after the month they turn 65.
* 41% assume incorrectly that there are out-of-pocket caps for Medicare coverage. In reality, retirees must enroll in Medigap to limit their out-of-pocket expenses.
* 40% believe incorrectly that Medicare will pay for them to stay in a nursing home when they can no longer take of themselves.
“Even as many Americans look to turn the page on the events of the last two years, staying informed on potential future healthcare costs should remain a top factor when planning for retirement.”
Hope Manion, Fidelity Workplace Consulting.
John Commins is the news editor for HealthLeaders.
KEY TAKEAWAYS
Fidelity's 21st Annual Retiree Health Care Cost Estimate for single retirees is $150,000 for men and $165,000 for women.
The estimate assumes both members of the couple are enrolled in traditional Medicare and Medicare Part D, which covers prescription drugs.
The 2022 estimate is up 5% from 2021 ($300,000) and has nearly doubled from its original $160,000 in 2002, the first year the estimate was published.