This is How Much Retiring Couples Will Spend on Healthcare

spend on healthcare, Milliman healthcare costs

It's a lot, but it's also less than last year's projection from Milliman.

According to a new report by Milliman, a healthy 65-year-old couple retiring in 2020 is projected to spend approximately $351,000 in today’s dollars ($535,000 in future dollars) on healthcare over their lifetime, down from a $369,000 projection in the 2019 report.

And a healthy 45-year-old couple is projected to spend approximately $505,000 in today’s dollars ($1.4 million in future dollars) on healthcare over their lifetime, down from $532,000 in the 2019 report.

While the cost projections have gone down from last year, these lofty figures nevertheless ought to be a reality check for 401k participants who might want to think about bumping up their deferral rate and/or starting or maxing-out a health savings account (HSA).

Milliman produces estimates of retiree health costs that are updated each year, developed for the purpose of educating employees and retirees about the potential cost of retiree health care.

The projected costs were calculated using the following assumptions:

Other findings from the 2020 whitepaper include:

The information contained in the report, authored by Milliman principal and consulting actuary Robert Schmidt and associate actuary Eric Walters, was prepared for Milliman to use in a retirement planning tool for retirement savings plan participants. The cost estimates do not include the projected impact of COVID-19 on premiums and out-of-pocket costs.

The report notes that projection of retiree healthcare costs is a complicated exercise, and actual results will vary from projections for a variety of reasons, including changes in rules and regulations, market forces impacting health care costs, changes in health status and external shocks such as epidemics or trends in new diseases.

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