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Lesko Financial: Tracking Medical and Health Expenses

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Bryanna: Many retirees get a shock when they realize how much of their nest eggs gets eaten by rising health care costs. Greg Lesko of Lesko Financial has the latest figures.

Greg: Fidelity investments has been tracking how much health and medical expenses will cost someone once they retire. The positive news is that the amount hasn’t changed all that much from last year’s numbers. The bad news is that costs are still going up. Fidelity says a 65-year-old man would need $133,000 for health care throughout his retirement. A 65-year-old-woman would need more: $147,000because women live longer than men. These can sound like staggering amounts to those still planning their retirement.

Bryanna: Do they take medicare into account?   

Greg: They’re just estimates, but these figures do account for the fact that medicare covers a portion of health expenses for those 65 and older. Fidelity’s dollar estimates are for out-of-pocket costs including medicare premiums, prescriptions and other health care needs. In addition to rising costs, the fact that retirees are living longer is one reason the estimates are so high. Also, people tend to spend more on health care as they age.   

Bryanna: How can retirees avoid being shocked by health care costs?   

Greg: One way is more planning. Retirees should save for health care separately from their other savings and investments and make it more of a priority as they get closer to retirement. They may need to save more than they origianally planned. They can investigate cost-savings such as health care in other countries, and practice preventive care, staying active and healthy longer.