A recent study by Fidelity Investments showed that a 65-year-old couple retiring in 2010 would need $250,000 in savings in order to cover medical costs, not including those incurred at a nursing home. This is 56 percent higher than reported in the study’s first year, 2002, and 4.2 percent higher than last year’s $240,000.
Costs for healthcare are consuming for a growing amount of couples’ monthly budgets, according to the study. At an average of $535 a month, these expenses are second only to those spent toward food, and account for one-fifth of average monthly expenses.
Therefore, workers approaching retirement should put their savings toward future medical costs, according to Brad Kimler, executive vice president of Fidelitys Consulting Services business.
“In the past, retirees relied on their former employers to provide healthcare coverage, but this is no longer something to which most of today’s retirees have access,” Kimler said.
These costs currently top the financial concerns experienced by retirees, according to the study. Thirty percent of respondents said they were worried about their ability to pay today’s healthcare expenses as well as those incurred while at a nursing home. Still, more than a third of respondents did not express financial concerns.
Increased expenses for those in or approaching retirement have made it more difficult for consumer spending to rebound after the recession, according to a separate study by PricewaterhouseCoopers. Thirty-seven percent of Boomers have adjusted their spending habits in response to recent losses.
“With significant wealth losses to recoup, the need to save and invest for the future will compete with spending at retail in a way it never has before for this generation,” the report said.
This shift will put more responsibility on younger generations, who have a less-urgent need to accumulate wealth, to stimulate the recovery.
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