Retired couples might need $400,000 in savings to cover medical expenses

Key Takeaways:

– Retired couples who are Medicare beneficiaries need around $413,000 saved to cover medical expenses in retirement, an increase from the previous year’s estimate of $383,000.
– This figure includes premiums, deductibles, and prescription drugs in retirement.
– Single men need to save $184,000, single women need to save $217,000, and couples in supplemental insurance plans need to save $351,000.
– The estimates aim to provide retirees with a 90% chance of meeting their health care spending needs in retirement.
– The Employee Benefit Research Institute (EBRI) used a simulation model that takes into account recent changes to Medicare Part D.
– The $413,000 estimate is an extreme case, assuming high prescription drug expenditures.
– Those enrolled in Medicare Advantage plans generally have lower savings targets compared to those not enrolled in such plans.
– A recent survey found that 25% of adults have no retirement plan besides Social Security, causing concern among seniors about their financial security in retirement.

HousingWire:

Retired couples who are Medicare beneficiaries could need as much as $413,000 saved to cover medical expenses in the latter stages of life, an increase over the previous year’s estimate of $383,000. This is according to new findings from the Employee Benefit Research Institute (EBRI).

The figure is the “predicted savings target for Medicare beneficiaries to cover premiums, deductibles, and prescription drugs in retirement,” EBRI explained.

The estimates break down differently for single men, women and couples who are part of Medicare supplemental insurance plans, and the figures aim to offer retirees “a 90% chance of meeting their health care spending needs in retirement.”

For single men, the savings figure is $184,000. For single women, the estimated figure is $217,000, while couples in supplemental insurance plans would need an estimated $351,000.

“Health care costs in retirement can be considerable and may not necessarily be a salient issue for workers,” said Jake Spiegel, research associate for health and wealth benefits Research at EBRI. “To project how much Medicare beneficiaries may need to save to have a reasonable chance of meeting their health care spending requirements in retirement, EBRI built a simulation model allowing for uncertainty due to mortality and rates of return on assets in retirement.”

The model takes recent changes to Medicare Part D into account, enacted as part of the 2022 Inflation Reduction Act passed by Congress and signed into law by President Joe Biden.

The EBRI model “tests varying assumptions about Medicare Advantage and [supplemental insurance] plans that Medicare beneficiaries may purchase,” Spiegel explained. “The output of this updated simulation model is the basis of this new report.”

The $413,000 estimate is an “extreme case,” the results explain. A couple would need to have “particularly high prescription drug expenditures” for that savings figure to adequately have a 90% chance of meeting health care spending needs during retirement.

The study also found that those enrolled in Medicare Advantage plans — private plans that “provide all of your Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) coverage” and that are separate from supplemental plans — have “generally lower savings targets” than those not enrolled in such plans.

“The results from EBRI’s projection model indicate that basic health care costs incurred by Medicare beneficiaries are high,” Spiegel added. “While the savings targets tend to be lower for Medicare Advantage enrollees relative to Medigap enrollees, there are important limitations to take into account.”

A recent survey found that nearly 25% of adults have no retirement plan besides Social Security, a benefit program that accounts for many older Americans’ primary source of cash flow in retirement. Social Security benefits rose in 2024 by 3.4%, but seniors continue to express concern over their ability to make ends meet.

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Property Chomp’s Take:

is an essential element in HTML coding that is used to create divisions or sections within a web page. It is a versatile and powerful tool that allows web developers to organize and structure their content effectively.

In recent news, the Employee Benefit Research Institute (EBRI) has released new findings regarding the projected savings needed by retired couples who are Medicare beneficiaries to cover medical expenses in their later stages of life. According to the report, the estimated savings target has increased from $383,000 in the previous year to $413,000. This figure includes premiums, deductibles, and prescription drugs expenses in retirement.

The study provides separate estimates for single men, single women, and couples who are part of Medicare supplemental insurance plans. Single men are advised to have savings of $184,000, while single women should aim for $217,000. Couples in supplemental insurance plans would need an estimated $351,000.

Jake Spiegel, a research associate for health and wealth benefits research at EBRI, emphasizes that healthcare costs in retirement can be significant and may not be at the forefront of workers’ minds. To project the necessary savings, EBRI developed a simulation model that takes into account uncertainties related to mortality rates and rates of return on assets in retirement.

The model also considers recent changes to Medicare Part D, which were enacted as part of the 2022 Inflation Reduction Act. This legislation has an impact on the assumptions made about Medicare Advantage and supplemental insurance plans that beneficiaries may purchase.

It is important to note that the $413,000 estimate is an extreme case and applies to couples with particularly high prescription drug expenditures. The study also highlights that those enrolled in Medicare Advantage plans generally have lower savings targets compared to those not enrolled in such plans.

These findings shed light on the high basic healthcare costs incurred by Medicare beneficiaries. While Medicare Advantage enrollees may have lower savings targets, it is crucial to consider the limitations of these plans.

Unfortunately, a recent survey has revealed that nearly 25% of adults have no retirement plan besides relying on Social Security benefits. Social Security is a vital program for many older Americans, but concerns persist about its adequacy in meeting retirees’ financial needs.

In conclusion, the

element may seem like a small aspect of web development, but it plays a vital role in organizing and structuring content. Similarly, understanding the projected savings needed for healthcare expenses in retirement is crucial for retired couples who are Medicare beneficiaries. The EBRI’s findings emphasize the importance of financial planning and saving to ensure a comfortable retirement with adequate healthcare coverage.

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