Projected savings targets needed to cover health care in retirement went up last year after several years of decline, but are still generally lower than they were five years ago, according to new research by the nonpartisan
In the latest annual update of its retiree health savings analysis, EBRI found that the range of retiree health savings targets rose between 0 6 percent between 2015 and 2016. While there are various factors at play, "the main reason for the increase in needed savings is related to the yearly adjustment for out-ofpocket spending for prescription drug use," said
Since the EBRI analysis does not factor in the savings needed to cover such things as long-term care expenses, retirement earlier than becoming eligible for
Conversely, he added some workers will need to save less than what is reported if they choose to work past age 65, thereby postponing enrollment in
Not surprisingly, those with high prescription drug costs would need to save substantially more. For a married couple both with drug expenses at the 90th percentile throughout retirement who want a 90 percent chance of having enough money saved for health care expenses in retirement by age 65, targeted savings would be
EBRI's latest analysis updates its previous estimates on savings needed to cover health insurance premiums and health care expenses in retirement. As before, it 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.
As Fronstin noted,
The full report, "Savings Medicare Beneficiaries Need for Health Expenses: Some Couples Could Need as Much as