Even Healthy Couples Will Face Extreme Health Care Costs in Retirement

A healthy 65-year-old couple retiring this year will spend $369,000 in today’s dollars on health care over their lifetime, according to Milliman. In future dollars, that increases to $551,000. By age 85, their health care expenses are 250% higher than at age 65.

These projections are based on several assumptions, not least of which is that the health statuses of the couple remain steady throughout their entire life spans, with the man living to age 87 and the women, 89. Nationwide average premiums and out-of-pocket expenses for a Medicare Supplement Plan G and a standard Medicare Part D are used. Medical costs are assumed to rise by 4.9% a year.

In 2019, a healthy 67-year-old couple will spend 39% of their pre-tax Social Security monthly benefit of $1,388.38 for retirees and $817.99 for spouses. Social Security cost-of-living adjustments of 2% in 2018 and 2.8% in 2019 are used.

Using the same assumptions applied to a healthy 65-year-old couple retiring in 2019, a healthy 45-year-old couple that retires at age 65 is projected to spend $532,000 on health care in 2019 dollars, and $1.4 million over their retirement years.

The estimated 2019 annual premium plus out-of-pocket cost for a healthy 65-year-old is $5,000, assuming that the health status of the retiree is average.

Milliman’s report can be downloaded here.