Retirees will need far more money to cover their health care expenses than previously estimated, according to a new study.
The non-partisan Employee Benefit Research Institute has publish a newly updated set of estimates for how much men, women and couples would need to deal with health insurance premiums and out-of-pocket health care expenses in retirement. The new estimates employ a Monte Carlo random simulation model.
Assuming that a 65-year-old individual supplements Medicare with retiree health benefits from a former employer and that the premiums are subsidized by a former employer, a man would need $68,000 in current savings to have a 50 percent chance of having enough money to cover health care expenses in retirement, or $134,000 in current savings for a 90 percent chance of having enough to cover retiree health costs. (The comparable 2008 numbers were $64,000 and $122,000.)
A woman would need current savings of $98,000 to have a 50 percent chance of having enough money for retiree health expenses, or $164,000 to have a 90 percent chance of having enough to cover retiree health costs. The numbers are higher for women because of their greater longevity. (The comparable 2008 numbers were $86,000 and $140,000.)
A married couple would need current savings of $165,000 to have a 50 percent chance of having enough money for retirement health costs, or $256,000 for a 90 percent chance. (The comparable 2008 numbers were $154,000 and $235,000.)
EBRI also provided estimates under other scenarios, such as when the premiums are not subsidized by a former employer, and when individuals do not have employment-based retiree health benefits and instead supplement Medicare with individually purchased Medigap and Medicare Part D outpatient drug coverage.
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