Savings Needed for Health Expenses in Retirement: An Examination of Persons Ages 55 and 65 in 2009

20 Pages Posted: 29 Jun 2009

See all articles by Paul Fronstin

Paul Fronstin

Employee Benefit Research Institute (EBRI)

Dallas Salisbury

Independent

Jack VanDerhei

Employee Benefit Research Institute (EBRI)

Date Written: June 2009

Abstract

This paper updates earlier EBRI research on estimated savings needed to cover health insurance to supplement Medicare and out-of-pocket expenses for health care services in retirement. It finds that men retiring at age 65 in 2009 will need anywhere from $68,000 to $173,000 in savings to cover health insurance premiums and out-of-pocket expenses in retirement if they want a 50-50 chance of being able to have enough money, and $134,000 to $378,000 if they prefer a 90 percent chance. With their greater longevity, women will need more: a woman retiring at age 65 in 2009 will need anywhere from $98,000 to $242,000 in savings to cover health insurance premiums and out-of-pocket expenses in retirement for a 50-50 chance of having enough money, and $164,000 to $450,000 for a 90 percent chance. For those seeking a median (50 percent) chance of having enough money for health care in retirement, these estimates are about 9 percent higher than a year ago for men and married couples, and 16 percent higher for single women.

Many individuals will need more money than the amounts cited in this report because this analysis does not factor in the savings needed to cover long-term care expenses, nor does it take into account the fact that many individuals retire prior to becoming eligible for Medicare. However, some workers will need to save less than what is reported if they choose to work during retirement and receive health benefits as active workers.

The PDF for the above title, published in the June 2009 issue of EBRI Notes, also contains the fulltext of another June 2009 EBRI Notes article abstracted on SSRN: “Many 401(k) Sponsors Suspending Matching Contributions Are Funding Defined Benefit Pension Plans.”

Keywords: Employment-based benefits, Health care costs, Medicare, Medicare supplement insurance, Prescription drug costs, Retiree health benefits, Retirement; Savings

JEL Classification: H51, I1, J14, J32

Suggested Citation

Fronstin, Paul and Salisbury, Dallas and VanDerhei, Jack, Savings Needed for Health Expenses in Retirement: An Examination of Persons Ages 55 and 65 in 2009 (June 2009). EBRI Notes, Vol. 30, No. 6, June 2009, Available at SSRN: https://ssrn.com/abstract=1427371

Paul Fronstin (Contact Author)

Employee Benefit Research Institute (EBRI) ( email )

901 D St., SW
Suite 802
Washington, DC 20024
United States
202-775-6352 (Phone)
202-775-6312 (Fax)

Dallas Salisbury

Independent ( email )

Jack VanDerhei

Employee Benefit Research Institute (EBRI) ( email )

1100 13th Street, NW
Suite 878
Washington, DC 20005-4204
United States

HOME PAGE: http://www.ebri.org

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
104
Abstract Views
1,516
rank
306,330
PlumX Metrics