A 65-year-old US worker retiring today could face an average of $165,000 in healthcare and medical costs throughout retirement, yet the average American estimates that those costs will be around $75,000, according to the findings of a new study.
Fidelity Investments’ 23rd annual Retiree Health Care Cost Estimate suggests that workers must be proactive in planning for healthcare and medical expenses in their retirement years.
“Healthcare costs are among the most unpredictable expenses, especially when it comes to retirement planning,” stated Robert Kennedy, senior vice president of workplace consulting at Fidelity. “As we approach the fall open enrollment period for healthcare benefits, it’s a great time for Americans to be proactive with their financial planning efforts. The best time to plan for those healthcare costs is long before they occur.”
Projected healthcare and medical costs in retirement for 2024 are up almost 5% over costs seen in 2023. That estimate has more than doubled since Fidelity began calculating those costs in 2002. Drivers of the increase include longevity and inflation. Healthcare inflation has outpaced the rate of general inflation over time, according to Fidelity.
Workers approaching age 65 should study up on their Medicare options and how they fit into their retirement plans, the company advised.
“We’ve heard directly from our clients that choosing health coverage in retirement is one of the most complex decisions they face,” said Harold Stankard, head of Fidelity Medicare Services. “For those approaching Medicare eligibility, or even those already in retirement, understanding how the options available can support individual needs is an important step in simplifying a strategy.”
