Retiring in 2016? Better have (lots of) money stuffed under the mattress

A 65-year-old couple retiring in 2016 will need to have an estimated $260,000 in savings to cover health care costs during retirement, according to a new analysis by Fidelity Investments.

The $260,000 cost estimate is up from $245,000 last year and is based on a life expectancy of 85 for men and 87 for women.

The estimate applies to retirees who have traditional Medicare insurance coverage and offers a pretty good idea of the monthly expenses a couple may have for Medicare premiums, copayments, deductibles and out-of-pocket prescription drug costs.

It is the highest cost estimate since Fidelity began calculating the numbers in 2002.

What’s driving the spending?

The answer boils down to two main reasons:

• People are using more medical services.
• Prescription drug prices are rising rapidly.

This year, the analysis also looked at costs associated with long-term care and determined that the 65-year-old couple retiring in 2015 would need an additional $130,000.

And that number assumes the couple is in good health and purchases a solid long-term care insurance plan.

A daunting reminder of how rising medical costs affect our lives. Do you have a medical cost story to tell? Please share at VoicesforAffordableHealth.com/share-your-voice/