Study: Healthy Retirees Have Higher Medical Costs

A longer lifespan means more years of paying Medicare premiums and uncovered expenses

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People who enter retirement in good health are likely to pay more for medical expenses throughout the rest of their life than those who retire after developing a chronic condition, according to a counterintuitive Center for Retirement Research at Boston College report released yesterday. While couples who retire without any chronic conditions have lower initial health care costs, they may also live longer than average and go on to incur greater health care costs over their lifetime, the study found.

[See The High Cost of Growing Older.]

“Those currently in good health would be unwise to infer that they will continue to enjoy lower than average health care costs,” write Wei Sun, Anthony Webb, and Natalia Zhivan of Boston College. “The reality is that even the currently healthy can expect to eventually suffer from one or more chronic diseases, which often results in high out of pocket and long-term care costs.”

[See Couples Need $250,000 for Retirement Health Costs.]

The researchers calculated that a couple turning 65 in 2009 in which one or both spouses suffer from a chronic disease is likely to have lifetime health care costs totaling $220,000. A 65-year-old couple without any health problems can expect to spend $260,000 on health costs throughout retirement. These estimates include the costs for Medicare Part B and D premiums, Medigap and retiree health insurance premiums, co-payments not fully covered by Medigap or retiree health insurance, and health care services not covered by Medicare or other insurance, including home health care and nursing home costs.

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Couples who enter retirement in good health can expect to live significantly longer than couples who already have health problems. That means more years of dipping into your retirement stash to pay for premiums and copays. Plus, many healthy couples could also end up eventually developing a health problem and incurring long-term care expenses at a later date, according to the study, which was underwritten by Prudential Financial. The top 5 percent of couples who enter retirement with a chronic condition could end up spending more than $465,000 on health care throughout retirement. Among couples entering retirement without any known conditions, the top 5 percent could be charged $570,000 for health care costs.