Retirees will need hundreds of thousands of dollars for post-retirement Medicare costs, report finds
Retirees will need to save hundreds of thousands of dollars to be 90% certain they can cover their post-retirement medical costs.
Even those who are eligible for Medicare will face major medical costs during retirement, according to a new report published by the Employee Benefits Research Institute. The analysis, “Projected Savings Medicare Beneficiaries Need for Health Expenses Remained High in 2022”, suggests that retirees will need to save hundreds of thousands of dollars to be 90% certain they can cover their post-retirement medical costs – figures that climb to $383,000 for some couples.
“Medicare was not intended to cover all the health care expenses beneficiaries might face,” says Paul Fronstin, director of Health Benefits Research at the Employee Benefits Research Institute, in a press release. “To help make these costs more salient, EBRI developed this projection model for estimating the savings Medicare beneficiaries may need to have a reasonable chance of meeting their health care spending needs.”
The research, which uses a simulation model that considers variable factors including mortality and returns on assets, looks at how much money Medicare beneficiaries need to store away in order to afford their deductibles, premiums, and prescription drugs.
According to the research, couples need around $318,000 in savings to have a 90% chance of affording their expenses. That number was even higher amongst couples who may have higher prescription drug expenses.
Likewise, a 65-year old male Medigap enrollee would need around $166,000 to be 90% certain he could cover his premiums and prescription drugs, per the new research. A woman of the same age needs even bigger coffers: about $197,000 in savings.
“The results from EBRI’s projection model indicate that health care costs incurred by Medicare beneficiaries are high,” Jake Spiegel, a research associate in Health and Wealth Benefits at the Employee Benefits Research Institute, says in a press release.
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However, he also notes that prices may vary between retirees, depending on prescription drug costs, Medigap premiums, and individual health care utilization.