EBRI Issue Brief

Savings Medicare Beneficiaries Need for Health Expenses in 2019: Some Couples Could Need as Much as $363,000

May 16, 2019 10  pages


2019 was a year of much change in predicted savings targets for Medicare beneficiaries to cover health expenses in retirement. Since 2011, the amount of savings Medicare beneficiaries are projected to need to cover program premiums, deductibles, and certain other health expenses in retirement has risen as much as 11 percent for some Medicare beneficiaries but has fallen by the same amount for others, according to EBRI’s estimates. Between 2018 and 2019, the amount has risen 5 percent for some and has fallen 11 percent for others. Savings are needed to pay for premiums for Medicare Parts B and D, premiums for Medigap Plan F, and out-of-pocket spending for outpatient prescription drugs.

The data used in EBRI’s analysis come from a variety of sources. EBRI employs a Monte Carlo simulation model for this evaluation that simulated 100,000 observations, allowing for the uncertainty related to individual mortality and rates of return on assets in retirement.

The analysis reveals:

  • In 2019, a 65-year-old man needs $79,000 in savings and a 65-year-old woman needs $104,000 in savings for a 50 percent chance of having enough to cover premiums and median prescription drug expenses in retirement. For a 90 percent chance of having enough savings, the man needs $144,000 and the woman needs $163,000.
  • For a 50 percent chance of having enough to cover health care expenses in retirement, a couple with median prescription drug expenses needs $183,000 in savings. For a 90 percent chance of having enough, the couple needs $301,000 in savings.
  • At the extreme — a couple with drug expenses at the 90th percentile throughout retirement who wants a 90 percent chance of having enough money for health care expenses in retirement by age 65 — targeted savings are $363,000 in 2019.
This $363,000 amount is lower than the nearly $400,000 required in 2018; this is primarily due to the fact that the Medicare Trustees reduced projected costs for Medicare Part D premiums and out-of-pocket expenses.