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

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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