Fidelity: Retiring couples need $240,000 for medical expenses

By Maryalene LaPonsie on May 15th, 2012

Couples retiring in 2012 can look forward to $240,000 worth of medical expenses in the coming years. That's according to an analysis completed by Fidelity Investments. The firm calculated retirement health care costs based upon a 65-year-old couple retiring this year. The 2012 figure represents a 4 percent increase from calculated cost for 2011 retirees.

However, for younger individuals, there is good news from the American Heart Association. Research presented at a recent scientific meeting of the association found midlife fitness can drive down health care costs during retirement years.

Health care costs outpacing Social Security increases

Fidelity has been tracking retiree health care costs since 2002. In that year, it estimated a 65-year-old couple would need $160,000 to pay for medical expenses during retirement. The cost has since increased an average of 6 percent each year. The one exception was 2011, when the cost declined $20,000 after Medicare health insurance coverage was changed to increase payments for prescription drugs.

Rising health care costs stand in sharp contrast to Social Security cost-of-living adjustments, which average only 2.3 percent annually. Fidelity indicates a couple earning $75,000 pre-retirement can expect to spend 35 percent of their annual Social Security benefit on medical expenses this year. By 2027, that amount could rise to 61 percent of their annual benefit.

The Fidelity analysis is based upon retirees with original Medicare health insurance coverage and does not include any costs associated with nursing home care.

Midlife fitness may mean lower retiree costs

While the Fidelity report offers sobering statistics, the American Heart Association reports there may be a way to lower retirement health care costs.

Research presented by the association discovered those with the highest levels of fitness in midlife had the lowest medical expenses after age 65. To determine its findings, the study tracked Medicare coverage of more than 20,000 healthy individuals from 1999-2009.

Those with the highest levels of fitness at age 51 were found to have the lowest annual medical expenses at age 65. The report broke down annual costs at age 65 by gender and fitness levels:

  • Men with the highest level of fitness: $3,277
  • Men with the lowest level of fitness: $5,134
  • Women with the highest level of fitness: $2,755
  • Women with the lowest level of fitness: $4,565

Study authors say the link between greater fitness and lower health care costs is consistent even when traditional risk factors are considered.

Maryalene LaPonsie
Maryalene LaPonsie has been writing professionally for more than a decade on topics including education, insurance and personal finance. She holds a Bachelor's Degree in Political Science from Western Michigan University.

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