Do you ever dream about retirement? Daydream at work and think, oh I can’t wait until the day I can kick back and do nothing but vacation, travel and read books? Of course you have. We all do. But I have some bad news folks. The latest report from Fidelity Investment is out and a couple aged 65 years will need $225,000 in order to retire right now and cover their medical expenses.

$225,000. What? I cannot even fathom having that amount. The even worse news for us 30-something-year-olds is that this figure is only going to grow. Since 2002, the estimated amount has grown 41 percent. Since last year, it’s increased 4.7 percent, or $10,000. If it continues at this pace, we’ll probably need somewhere in the neighborhood of $500,000!

And this is just to cover health costs. Not daily living. Not luxurious travels for which you worked so hard. Not the possible stint in a nursing home.

This has to do with many things. First of all, it’s unlikely that any of us will have employer-sponsored health insurance in retirement. Not like my dad who retired from GMAC after working there 30 years and now has full coverage (including dental and vision) for him and my mom. I mean, I know people who don’t even have job-based insurance WHILE they are working, let alone after they retire.

The second thing affecting the estimate is that people are living longer. This is not to say that people are living longer with perfect health, hence the high medical costs.

Coupled with a lack of post-retirement health insurance is the fact that no one retires from a job with a pension anymore. That means we have to take savings into our hands! Now that’s a scary thought!

The biggest problem with having to save THAT much money during the next 30 years for me is that I like to live and enjoy life in the moment. I am a saver. I’ve always been a saver. But I save on a small scale for a short-term reason. A big trip. A kayak. Eye surgery. J and I have some big plans about what we want to do with our lives. Banking $200K for medical bills still 30 years away is not one of them and I don’t really want to sacrifice our big ideas for a future that is unpredictable. Still, this number did scare me. It’s one of those struggles I have a lot … the balance between carpe diem and being sensible.

I will say that thankfully, my employer was pretty diligent in getting me to start a 401(k) from the beginning of my job and now it’s just natural. I think I have a good head start in there, but nowhere near the amount experts anticipate I will need. And J? He has his piggy bank that he calls his 401(k). We won’t go there. And I will get off my soapbox now. My point–better start saving your pennies.

3 responses to “$225,000”

  1. Anonymous says:

    The trick is to save and save consistently – I remember my dad telling me when I was 18 that if I opened an IRA and added $100-$200/mo until I was a little over 60, it would likely be around $1 million dollars, which if the IRA is managed well, is not outside the realm of possibility. The later you start, the harder it is. Check out the financial calculator at http://www.dinkytown.net/java/Millionaire.html

    It’s kinda cool. And keep up with the 401(k), and perhaps think of starting up a Roth IRA account!


  2. Anonymous says:

    I think J has a greatidea with the piggy bank, smart thinking!

  3. Tommy's mommy says:

    This is why you guys need to rethink your “no kids” plan. Why do you think the rest of us are doing it? To get the lawn mowed and to have someone around to guilt into paying for the old folks home–duh!

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