“Amount of Savings Needed for Health Expenses for People Eligible for Medicare: Good News Not So Rare Anymore,” and “IRA Asset Allocation, 2012, and Longitudinal Results, 2010-2012”

October 2014, Vol. 35, No. 10
Paperback, 28 pp.
PDF, 2,271 kb
Employee Benefit Research Institute, 2014

Download Notes PDF pdf

Executive Summary

Health Savings:


• Medicare beneficiaries can expect to pay a share of their costs out of pocket because of program deductibles and other cost sharing. In 2011, Medicare covered 62 percent of the cost of health care services for Medicare beneficiaries ages 65 and older, while out-of-pocket spending accounted for 13 percent, and private insurance covered 15 percent.


• In 2014, a man would need $64,000 in savings and a woman would need $83,000 if each had a goal of having a 50 percent chance of having enough money saved to cover health care expenses in retirement. If either instead wanted a 90 percent chance of having enough savings, $116,000 would be needed for a man and $131,000 would be needed for a woman.


• Savings targets declined between 2 percent and 10 percent between 2013?2014. For a married couple both with drug expenses at the 90th percentile throughout retirement who wanted a 90 percent chance of having enough money saved for health care expenses in retirement by age 65, targeted savings fell from $360,000 in 2013 to $326,000 in 2014.


IRAs:


• The latest data from the EBRI IRA Database show that just over one-half of all IRA assets were allocated to equities, although this varied with age, account balance, and IRA type. Gender differences in asset allocations were minimal.


• Those older or owning a traditional IRA had, on average, lower allocations to equities. Individuals with the largest balances had the lowest combined exposure to equities (including the equity share of balanced funds to the pure equity funds).


• This study includes the first look at asset allocation longitudinally from 2010?2012 and finds that equity allocations in 2010 were very similar to those of 2012. This result appears to be driven by the almost-60 percent of accounts that remained at an extreme value (0 percent or 100 percent allocation) in both years.