Hoping to retire soon when you reach the age of 65? How much should you be saving for health care expenses that won’t be covered by Medicare?
There are many unknown factors when it comes to predicting individual health care costs, but the one thing we can pretty much count on is health care inflation. According to Standard & Poor’s, costs for health care went up by more than 5% in 2012, while the Consumer Price Index—a common measure of inflation—rose less than 2%.
In December 2010, the Employee Benefit Research Institute (EBRI) estimated that a couple with median drug expenses would need to save $271,000 in order to have a 90% chance of covering their projected health care costs in retirement. That may sound like a big number, but when you consider that it translates to an annual cost of $13,550 for 20 years, it’s more realistic. Here’s how to plan.