Retired clients on Medicare need more than $100,000 in savings to cover health care expenses and the amount needed will grow significantly over the next ten years, says the Employee Benefits Research Institute.

A 65-year-old man retiring in 2009 who has employment-based retiree health benefits to supplement Medicare but whose former employer does not subsidize premiums-an increasingly common situation-would need $111,000 in savings if he wanted a 50% chance of having enough money to cover health care expenses in retirement, according to EBRI. That number rises to $217,000 if he wants a 90% chance of covering those expenses, EBRI says. Women would need more money because they live longer: $159,000 for a 50% chance and $266,000 for a 90% chance.

In 2019, a 65-year-old man who paid the entire premium for health benefits through a former employer would need $186,000 in savings if he wanted a 50% chance of having enough money to cover retirement health care expenses, EBRI says. For a 90% chance of covering those expenses, he'd need $364,000. For women it's $266,000 for a 50% chance and $446,000 for 90%.

In 2006, Medicare covered 60% of the cost of health care services for Medicare beneficiaries ages 65 and older. In the future, individuals can expect to pay even more in premiums and out-of-pocket costs for health care services in retirement because of the deteriorating financial condition of the Medicare program, EBRI says. The Part A trust fund is expected to become insolvent in 2017, under intermediate cost assumptions, it adds.

The information was published in June 2009 EBRI Notes and the full text can be found by clicking here.