Funding Savings Needed for Health Expenses For Persons Eligible for Medicare

Source: Employee Benefit Research Institute, EBRI Issue Brief #351, December 2010

From the summary:
This report updates earlier modeling by EBRI on the level of savings needed for health care expenses in retirement. Some prior estimates have been significantly revised down as a result of changes to Medicare Part D cost sharing that will be phased in by 2020 due to recently enacted health reform. However, the research indicates that retirees will continue to need a substantial amount of savings to cover their health care expenses in retirement, and that uncertainty related to health care use, prescription drug use, and longevity will still play a major role in planning for retiree health care. As before, EBRI’s research shows that women will need significantly higher levels of savings than men, due to their greater longevity. Results are shown by the desired level of probability (50, 75, and 90 percent) of having enough savings to cover health costs in retirement.

EBRI finds that a man with median drug expenditures would need $65,000 in savings and a woman would need $93,000 if they want an average (50 percent) chance of having enough money to cover health care expenses in retirement. For a higher (90 percent) chance of having enough, a man would need $124,000 and a woman $152,000.

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