Fidelity Says Baby Boomers Haven't Even Saved Enough To Cover Their Healthcare In Retirement

While statistics are somewhat sketchy on the topic, most research suggests that the average retirement-age household has managed to set aside roughly $200,000-$250,000 for their golden years.  Unfortunately, they'll need more than that just to cover their healthcare costs.  Per Bloomberg notes today, the average 65-year-old couple will need roughly $275,000 to cover their healthcare costs during retirement...and that's with Medicare.

A 65-year-old couple retiring this year will need $275,000 to cover health-care costs throughout retirement, Fidelity Investments said in its annual cost estimate, out this morning. That stunning number is about 6 percent higher than it was last year. Costs would be about half that amount for a single person, though women would pay a bit more than men since they live longer.


You might think that number looks high. At 65, you’re eligible for Medicare, after all. But monthly Medicare premiums for Part B (which covers doctor’s visits, surgeries, and more) and Part D (drug coverage) make up 35 percent of Fidelity’s estimate. The other 65 percent is the cost-sharing, in and out of Medicare, in co-payments and deductibles, as well as out-of-pocket payments for prescription drugs.


And that doesn’t include dental care—or nursing-home and long-term care costs.


Of course, the problem remains the staggering inflation of healthcare costs that continue to rise at many multiples of overall inflation and wage growth. 

U.S. retiree health-care costs are likely to increase at an average annual rate of 5.5 percent over the next decade. That's nearly triple the 1.9 percent average annual inflation rate in the U.S. from 2012 to 2016 and more than double the projected cost-of-living adjustment (COLA) on Social Security benefits.


The premiums on supplemental insurance, also known as Medigap, that many people buy to cover costs that Medicare doesn't, such as co-payments; on Medicare Part B, which covers payments for doctors, tests, and other medical services; and on Part D, prescription drug coverage. Here's how your Social Security benefits are likely to stack up against some of those costs.


Meanwhile, the shocking inflation of healthcare costs spells disaster for younger families who will have to set aside millions to cover their healthcare in retirement.


Of course, excessively rising costs, for our legislators who may not be so good with the math, is usually the result of demand outstripping supply and/or perverse regulations that serve to distort free market forces.  In the case of Obamacare, we have both. 

As an example, before Obamacare many healthy young people, who we'll refer to collectively as John Doe, chose not to even carry health insurance because it was a truly wasteful expense for them.  As it turns out, millennials can actually do some basic math and figured out that they didn't need to spend $5,000 a year for an insurance plan when the odds are that they'll get a cold one time, pay $150 to visit a doctor and $40 to buy some antibiotics.

But then Obamacare came along and forced John Doe to, not only purchase insurance, but to purchase a 'souped up,' expensive plan with all sorts of bells and whistles. 

Now, Democrats knew that that 'souped up' healthcare plan was really just a thinly veiled tax on John Doe...he wasn't supposed to actually use it. 

But John Doe, didn't see it that way.  From his perspective, if he's paying for a service, he might as well use it...and hence the demand issue.

Moreover, that simple example says nothing about the adverse selection bias created by Obama's subsidies and exchanges where people with absolutely no "skin in the game" can get 'free healthcare,' courtesy of the millionaire, billionaire, private jet owners in the country, and consume as much healthcare as they want basically free of charge. 

To make a long story longer, the net effect of Obamacare was that it added a ton of demand to an already undersupplied healthcare market which is why healthcare premiums are soaring.  Perhaps, just maybe, basic economic principles actually work and more 'skin in the game,' rather than less, and more people making their own decisions, rather than less, are actually good things?  Just a hunch but we hear that a lot of work has been done on the topic.

Of course, we highly doubt that any of this will stop our politicians from turning the healthcare debate into a fued between young and old and the rich and poor...afterall sowing division is how elections are won...and lost.


Bes The_Juggernaut Fri, 08/25/2017 - 16:47 Permalink

maybe if people fucking cut down on:-obesity-"pain managment" read addiction-trying to pop pills for stress/depression, read addiction-outright addictionand actually try to focus on actually living healthier fucking lives (emotionally, physically, and socially)then maybe, just maybe costs would be a lot fucking lowerjust a thought#maga

In reply to by The_Juggernaut

fockewulf190 Bes Sat, 08/26/2017 - 11:43 Permalink

Math is eventually going to wrench control away from the system overlords and force draconian measures on all aspects of life that are currently being taken for granted. Alzheimer's and dementia ALONE is going to bankrupt healthcare systems within much of the western world within 10-15 years max. When you start seeing one state/country after the next liberalize euthanasia laws (just to save on end of life expenses), you know the system is itself on it's deathbed.

"Hundreds of trillions in unfunded liabilities". How often have you heard or read this. Combine that with the ever increasing national debt, the fiat currency debasement, and the quadrillion plus amount of outstanding derivatives, and you have the formula for the upcoming Dark Ages Part II.

Anybody with half a brain must know this is not going to work. It's just all so the powers that be know a 5 Kilometer asteroid is on the way, or some other extinction level event, and they just figured "Fuck it...we'll just keep this bitch going with the printing presses till it hits". Seriously, what else could explain such suicidal group think amongst the government and economic leaders of the world?

In reply to by Bes

BetterRalph HelluvaEngineer Fri, 08/25/2017 - 15:58 Permalink

Those costs your quoting are garbage.
Visit the Oklahoma Surgery Center.


who needs insurance? I don't.
I can pay for my next heart attack out of pocket!

Of course I won't have one now, since I changed my ways, which is the secret SECOND part of Health Care. You got to fix your nutrition and take care of your body if your responsible for yourself.

The whole way the hospitals are is wrong.

In reply to by HelluvaEngineer

Shadow1275 Honey-Badger (not verified) Fri, 08/25/2017 - 15:48 Permalink

So who wants who to pay for who again? Or should I say this time? Honestly I feel bad for the boomers, they were barely born before they were forced to pay for their parents, I.E. Social Insecurity, who had only been paying into the system for about 20-30 years of their lives. The parents of the greatest generation didn't pay into it at all. They simply just collected. Pay in my ass, it's wealth distribution. I don't hate BBs, they have a lot more class than millennials and the like. But when the system collapses and they're demanding their SS and Medicare, do they really think they're going to convince some Dindu, Muslim, or a non-cucked White Man to pay that stuff when we're all trying to survive in the hellhole that is SOcialist Collapse? Nature has little mercy for the weak. and that mercy is in the form of death unfortunately

In reply to by Honey-Badger (not verified)

Chief Wonder Bread Peak Finance Fri, 08/25/2017 - 18:03 Permalink

You just hate yourself. The whole generational thing is a con. It got jump-started with Strauss & Howe. They monetized it with their books and then ongoing with their LifeCourse Associates (google it). People never thought seriously about generational conflict until then except in a light-hearted way (Shakespeare). It's a form of identity politics, a divide and conquer strategy. It created bewilderment within the psyche of the broad American middle-class - at least those inclined to speculative moon-gazing - which was the purpose all along for the leftists in academia. Slice and dice identity among the white majority, this time according to generations and another crack is exploited within society. Libertarians hip-hoorayed over the monetization of the idea -- another "triumph" LOL. You are just another dupe for the con and the jews love you.

In reply to by Peak Finance

ET (not verified) casapi Fri, 08/25/2017 - 16:38 Permalink

The unhealthy and gluttonous American lifestyle leading to a massive obesity epidemic will destroy whatever social fabric is left of this country. Anger will flare when the healthcare costs are paid for by those who heeded all the free and sound healthcare advice while others sat and ate and sat and ate to oblivion.If your body mass index is over 27, shame on you.

In reply to by casapi

Nostradumbass JoeJitsu Fri, 08/25/2017 - 16:05 Permalink

One day you just may miss the boomers - at least some of them. Why? Because some of them who have planned a retirement and now have the time to, can address many of the problems facing all of us. It is only when people are not bowed down under the yoke of endless labor that they can respond to the troubles coming to them from (((those))) who are trying to enslave all of us.I for one, am dedicating my final decades to doing what I can to throw a wrench into the evil machinery designed to give this world over to this evil empire. In any way I can I will strive to inform anyone who will listen...Do you think there are any other generations coming along who will ever be able to have the time and motivation to do this?

In reply to by JoeJitsu

VZ58 Nostradumbass Fri, 08/25/2017 - 17:10 Permalink

Hilarious. Yeah like that will ever happen with the most narcissistic generation ever! They are out blowing their kids' inheritance and kicking the debt can down the road to their grandkids. And then they will suck the last remaining finds out of Medicare. What a sweet generation they are. Singularly responsible for raising morons and destroying this country over the last forty years. 

In reply to by Nostradumbass