Milliman Retiree Health Cost Index: A 65-year-old couple needs $395,000 in savings for healthcare in retirement
July 24 2024 - 2:07PM
Business Wire
Milliman, Inc., a premier global consulting and actuarial firm,
recently released its 2024 Retiree Health Cost Index which projects
how much money, on average, a healthy 65-year-old can expect to
spend on healthcare costs in retirement. The index explains how
factors like when a person retires, where a person lives, and which
coverage a person chooses will impact the total cost of premiums
and out-of-pocket expenses.
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Source: Milliman Retiree Health Cost
Index, www.milliman.com/retireehealthcosts
The two most common healthcare coverage options chosen by
Medicare-eligible retirees are Medicare Advantage Part D (MAPD) and
Original Medicare with Medigap plus Part D. A healthy 65-year-old
male retiring in 2024 with an MAPD plan is projected to spend
$128,000 on healthcare in his remaining lifetime. A female with the
same coverage is projected to spend $147,000 in her remaining
lifetime. The difference in cost is largely because women on
average live longer than men.
Under Original Medicare with Medigap plus Part D instead, these
projections increase to $281,000 for a male and $320,000 for a
female, or a combined total of $601,000 for a 65-year-old couple.
In today’s dollars (assuming a 3% investment return), this reflects
$395,000 in savings needed.
In 2024, Medicare Advantage costs decreased about 4% and Medigap
costs increased about 2% when compared to 2023. The largest drivers
of these changes include:
- Increased drug spending, including weight-loss and diabetes
drugs such as Ozempic and Jardiance
- Higher Medicare Part B premiums
- Lower MAPD premiums and out-of-pocket costs
- The Inflation Reduction Act, which required changes to Medicare
Part D
"Healthcare expenses are an important and sometimes overlooked
component of retirement planning," said Robert Schmidt, a Milliman
principal and co-author of the Retiree Health Cost Index. "By
taking a realistic look at their health status and healthcare
expenses, and then budgeting accordingly, people can take steps to
enjoy a less stressful, financially healthier retirement.”
To view the complete Retiree Health Cost Index, visit
https://www.milliman.com/retireehealthcosts.
About Milliman
Milliman is among the world's largest providers of actuarial,
risk management, and technology solutions. Our consulting and
advanced analytics capabilities encompass healthcare, property
& casualty insurance, life insurance and financial services,
and employee benefits. Founded in 1947, Milliman is an independent
firm with offices in major cities around the globe. Visit us at
milliman.com.
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Robert Schmidt Milliman, Inc. Tel: 1 208 342 3487 Email:
Robert.Schmidt@milliman.com