Needed Savings for Health Care in Retirement Continue to Fall
Targeted News Service |
Projected savings targets American elderly need to cover their health care costs in retirement continue to decline, due in part to enhanced prescription drug coverage provided by the Patient Protection and Affordable Care Act (PPACA), according to new modeling by the nonpartisan
The EBRI report, an update of previous computer modeling of retiree health savings needs, found that savings targets declined between 2 percent and 10 percent between 2013 2014. For a married couple both with drug expenses at the 90th percentile throughout retirement who wanted a 90 percent chance of having enough money saved for health care expenses in retirement by age 65, targeted savings fell from
In 2014, a man would need
As the EBRI report notes,
"
As the EBRI report notes, when outpatient prescription drugs were added as an optional benefit under
However, Fronstin notes, regardless of the effects of PPACA, individuals may pay a greater share of their overall costs in the future because of the combination of the financial condition of the
The EBRI report points out that projections of savings needed to cover out-of-pocket expenses for prescription drugs are highly dependent on the assumptions used for drug utilization, which is why the analysis provides three sets of estimates: prescription drug use is at the median (mid-point, half above and half below) throughout retirement; prescription drug use at the 75th percentile throughout retirement; and in prescription drug use is at the 90th percentile throughout retirement. "It should be noted that many individuals will need more than the amounts cited in this report," said Fronstin, because it does not factor in the savings needed to cover long-term care expenses, nor does it take into account the fact that many individuals retire prior to becoming eligible for
The full report, "Amount of Savings Needed for Health Expenses for People Eligible for
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