Retirees facing minimum $200K bill for lifetime care

Unexpected spikes in health care expenses can dramatically ramp up the cost of lifetime care for retirees.
A news study conducted by the Center for Retirement Research at Boston College found that a couple who are both aged 65 — and who are free of chronic disease — can expect to spend $197,000 on health care costs, including insurance premiums, out-of-pocket expenses and home-health costs, over the rest of their lives.
But the nearly $200,000 figure does not include the costs of nursing-home care, and researchers said there’s a 5% risk that the present value of the uninsured health care expenses will exceed $311,000.
The couple also stands a 5% chance of that cost rising over the $570,000 mark. Fewer than 15% of households nearing retirement have that amount of money in total assets, the study noted.
The primary health care expense for retirees is co-payments for services covered by Medicare and non-covered services.
Certainly, the expense behind nursing home care can be steep; the annual cost of a nursing home was $71,000 for a semi-private room and $79,000 for a private room in 2008, according to the study.
Wage growth, rather than the advances in health care technology, is driving the cost of nursing homes, the study found.
The study, which was underwritten by Prudential Financial Inc., involved the use of simulations to examine the lifetime health care costs of couples at the age of 65. In each simulation, the couples eventually develop chronic disease, enter a nursing home and then die.
Interestingly, the study also revealed that costs can hit their highest levels for a married septuagenarian couple. At age 70, 5% of couples can expect to pay $317,000 in health care costs for the remainder of their lifetimes.
The mean at that age is slightly below where it stands for 65-year-olds: $192,000. However, from that point onward, the cost of health care declines.