top of page
Return to this month's index page
This Month's Cover

Volume XXIX
Winter 2017

Our Generation

Retirement Health Care Costs

Health Care Costs for a 65-Year-Old Healthy Couple to Exceed $288,000

HealthView Services' Retirement Health Care Costs Data Report explores emerging trends and provides detailed projections of health care expenses in retirement. The report reveals that health care costs for retirees, driven by health care inflation, age, and increased cost shifting, are continuing an upward trajectory.

HealthView's data shows the average healthy 65-year-old couple retiring 2016/2017 is projected to spend $288,400 in today's dollars on lifetime Medicare Parts B, D and supplemental insurance (Plan F) premiums. When dental, hearing, vision and all other out-of-pocket expenses are included, the total retirement health care bill rises to $377,412.

"Few Americans have taken steps toward addressing medical expenses in retirement, and most do not understand Medicare costs," said Ron Mastrogiovanni, Founder and CEO of HealthView Services. "Our data shows the significant impact of rising health care costs and the importance of planning for them."

For retirees counting on Social Security income, HealthView Services' Retirement Health Care Cost Index® shows the portion of benefits required to cover projected lifetime medical expenses. A 66-year-old couple retiring this year will need 57 percent of their Social Security to cover total health care costs. A 55-year-old couple retiring in 10 years will require 88 percent, and a 45-year-old couple, 116 percent. These calculations are based on Social Security Trustees' projections of a 3.1 percent Cost of Living Adjustment (COLA) in 2017 and 2.7 percent thereafter.

According to Mastrogiovanni, "What has not changed is that many Americans will still see a significant portion of their Social Security income consumed by health care costs; for some, medical expenses could eventually exceed their benefits."

A key cost driver is health care inflation in retirement. Overall retirement health care costs are projected to have increased by 7.3 percent between 2015 and 2016, driven in part by a 16.1 percent increase in Medicare Part B premiums over the same period. Over the next 20 years, HealthView projects a more modest average annual inflation rate of 5.1 percent for retirement health care expenses. This is consistent with forecasts from the Centers for Medicare and Medicaid, which expects at least eight years of health care inflation between 5 and 7 percent.

Other findings include the cost disparity between genders, driven by a greater average life expectancy for women. A 30-year-old female retiring at 65 can expect to pay $548,098 (in today's dollars) in total lifetime retirement health care expenses - $118,632 more than a male of the same age (based on life expectancies of 91 and 87, respectively).

Similarly, healthy Americans can expect to pay significantly more for retirement medical services than those suffering from a chronic disease that may impact their lifespans. A healthy male or female can expect to pay almost twice as much for lifetime health care in retirement than someone who is diabetic.