Recently, Fidelity came out with a study stating that the average male retiree would need $143,000 for out of pocket medical costs in retirement not including long term care; for women, the estimate is $157,000. For a couple, $300,000.I nearly fell off of my chair!Then, when I examined the figure a bit more closely, I felt...well, relieved would be an overstatement. But I was less panicked. Here’s why:
The take-home message here is not that you must have the full amount set aside for medical costs on the day that you turn 65 (although that certainly would be fantastic). Rather, you need to consider the substantial ongoing out-of-pocket costs for medical care over the length of your retirement years and factor that into your cash flow planning. Medicare covers a lot, but according to the Kaiser Family Foundation, the typical Medicare household will still need to devote 15% of their budget to healthcare expenses. When you consider your sources of income in retirement, are they sufficient to cover this? Not sure? This is a puzzle that the Your Money Line team can help you solve!