Citizens may now need to put away even more money for retirement, according to research by Fidelity Investments. According to a Fidelity Investment's report, retired couples will need $240,000 just to cover healthcare costs alone. This staggering total is enough to send the average employee into shock. Is $240,000 a realistic number, and how did medical costs get so high? Here is a look at why retired couples need to save so much money just for healthcare costs, and what can be done to keep that number from increasing even further.
Ever-Rising Medical Costs
Medical costs seem to constantly be on the rise, and for retired couples, this is a major concern. In recent years, healthcare costs have risen dramatically due to overuse of medical resources, medical malpractice suits and rising administrative costs. Retired couples who are surviving off of their own savings without supplemental income often find it difficult to keep up with the rising costs.

Age Group Prone to Physical Ailments
If there is any one age bracket that has more physical ailments than another, senior citizens would definitely take the prize. They are physically frailer which tends to lead to more physical injuries. The age when citizens are most likely to need assistance with healthcare costs, is also a time when many are surviving off of retirement savings alone. This can put a heavy burden on the shoulders of retired couples. Fortunately for retirees, Medicare is available to offer assistance in reducing the burden of healthcare costs, but there is still a patient responsibility involved.

Without Medicare, Healthcare Costs Will Skyrocket
The average healthcare costs for a retired couple is currently estimated at $240,000. However, this number could easily skyrocket even higher should the Medicare program lose its government funding. While Medicare doesn't cover 100% of medical costs, it does cover 80% of allowable charges once the patient deductible has been satisfied. Without the assistance of the Medicare program, healthcare costs will rise astronomically for senior citizens.

Just the Tip of the Iceberg
The $240,000 mentioned earlier, that is needed to cover healthcare costs for retired couples, is only the tip of the iceberg. They will also need to factor in the cost of housing, bills, food and other living expenses. This cost seems astronomical, especially when you consider all the other expenses retirees have to deal with. At a time when most citizens believe they will be enjoying the prime of their lives, many retirees feel overwhelmed with stress over their financial situation.

What Can Be Done?
In order to offset the sting of high medical costs during retirement, an aggressive retirement savings plan must be configured. In today's world, citizens cannot just worry about housing costs and living expenses. Americans must also be concerned with how they will pay for their medical expenses after they have retired. The only feasible way to offset high healthcare costs during retirement is to start saving aggressively using savings accounts and 401(K) plans to get the best possible outcome for retirement.

The Bottom Line
Healthcare costs continue to rise year after year, and future retirees may find themselves in a serious financial crisis if they do not plan wisely for the future. The best possible way for this generation and the next to get ahead is to start saving now, and develop an aggressive savings plan for the future. Although retirement may be a long way off for some, it is better to start saving now than be caught short-changed in the future.

Related Articles
  1. Mutual Funds & ETFs

    ETF Analysis: Direxion Daily Healthcare Bull 3X

    Learn about the Direxion Daily Healthcare Bull. This is a leveraged ETF that tracks the health care sector, which is a leader in this bull market.
  2. Stock Analysis

    2 Catalysts Driving Intrexon to All-Time Highs

    Examine some of the main reasons for Intrexon stock tripling in price between 2014 and 2015, and consider the company's future prospects.
  3. Retirement

    Overhaul Social Security to Fix Retirement Shortfall

    There are several theories and ideas about how we can make up for the $6.6 trillion retirement savings shortfall in America. Adjustments to Social Security and our retirement savings plans are ...
  4. Investing News

    How Does US Social Security Measure Up Abroad?

    Social Security is a hotly debated topic. After examining the retirement plans of three different countries, the U.S.'s does not come out the winner.
  5. Mutual Funds & ETFs

    ETF Analysis: ProShares UltraPro Nasdaq Biotech

    Obtain information about an ETF offerings that provides leveraged exposure to the biotechnology industry, the ProShares UltraPro Nasdaq Biotech Fund.
  6. Mutual Funds & ETFs

    ETF Analysis: SPDR S&P Insurance

    Learn about the SPDR S&P Insurance exchange-traded fund, which follows the S&P Insurance Select Industry Index by investing in equities of U.S. insurers.
  7. Retirement

    The World's Most Luxurious Retirement Destinations

    If money is no object (or if you would just like to dream), these five spots are the crème de la crème.
  8. Professionals

    How to Protect Elderly Clients from Predators

    Advisors dealing with older clients face a specific set of difficulties. Here's how to help protect them.
  9. Professionals

    Social Security 'Start, Stop, Start' Explained

    The start, stop, start Social Security strategy is complicated. Here's what retirees considering it need to consider.
  10. Retirement

    Strategies for a Worry-Free Retirement

    Worried about retirement? Here are several strategies to greatly reduce the chance your nest egg will end up depleted.
RELATED TERMS
  1. Section 1231 Property

    A tax term relating to depreciable business property that has ...
  2. Emergency Banking Act Of 1933

    A bill passed during the administration of former U.S. President ...
  3. Gross Domestic Product - GDP

    The monetary value of all the finished goods and services produced ...
  4. Qualified Longevity Annuity Contract

    A Qualified Longevity Annuity Contract (QLAC) is a deferred annuity ...
  5. The New Deal

    A series of domestic programs designed to help the United States ...
  6. Net Collections

    A term used in medical accounting to describe the amount of money ...
RELATED FAQS
  1. Why would someone change their Social Security number?

    In general, the Social Security Administration, or SSA, does not encourage citizens to change their Social Security numbers, ... Read Full Answer >>
  2. Are spousal Social Security benefits taxable?

    Your spousal Social Security benefits may be taxable, depending on your total household income for the year. About one-third ... Read Full Answer >>
  3. What are the best ways to sell an annuity?

    The best ways to sell an annuity are to locate buyers from insurance agents or companies that specialize in connecting buyers ... Read Full Answer >>
  4. Are spousal Social Security benefits retroactive?

    Spousal Social Security benefits are retroactive. These benefits are quite complicated, and anyone in this type of situation ... Read Full Answer >>
  5. Are Social Security payments included in the US GDP calculation?

    Social Security payments are not included in the U.S. definition of the gross domestic product (GDP). Transfer Payments For ... Read Full Answer >>
  6. Where are the Social Security administration headquarters?

    The U.S. Social Security Administration, or SSA, is headquartered in Woodlawn, Maryland, a suburb just outside of Baltimore. ... Read Full Answer >>

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!