A typical U.S. couple will need as much as $413,000 to cover their healthcare expenses in retirement, an 8% increase from a year ago, according to the Employee Benefit Research Institute (EBRI),

To have a 50% chance of meeting healthcare expenses, a 65-year-old man enrolled in a Medigap Part G plan with average premiums would need to have $106,000 saved for healthcare and a woman would need $128,000, according to the study.

If they’d like a more certain 90% chance of covering these expenses, the same man and woman would need $184,000 and $217,000, respectively, or $351,000 if they were a couple.

If the couple has particularly high prescription drug expenses, they would need $413,000, EBRI said.

“The fact of the matter is, most people aren’t going to be hitting their max out-of-pocket costs year after year,” said Jake Spiegel, who co-authored the report. “So they would end up with the lower savings target.”

The  EBRI assumed a $2,000 cap on prescription drug costs beginning in 2025, thanks to the Inflation Reduction Act of 2022. And it calculated the return on the savings invested in a 60/40 portfolio with a 3% return on the bond portion and a fluctuating return on the equity portion, he said.

“Our model doesn’t take into account expenses that people might face that Medicare doesn’t cover, such as dental or vision. And it doesn’t take into account if someone has to live in assisted living or hospice,” Spiegel said. “Long-term care costs can be pretty significant.”

For the first time, EBRI also looked at how Medicare Advantage plans, which many retirees are choosing to control costs, compared to the traditional Medicare route plus Medigap Part G insurance.

While there can be significant variations in Medicare Advantage plans, 73% of enrollees chose a zero-premium plan in 2023, choosing instead to pay more out of pocket as care was needed.

That same 65-year-old man wanting a 50% chance of meeting healthcare expenses in retirement would need to have saved $57,000—just over half of what a traditional Medicare enrollee would need. And a woman would need $69,000. For those wanting a 90% chance, they would need $99,000 and $116,000, respectively, or $189,000 as a couple.

“There certainly are trade-offs. If you’re the person who wants the safety of knowing you can go with any provider, then Medigap Plan G could be the way to go,” Spiegel said. “But if you’re willing to put in the leg work and spend some time figuring out how best to manage your care within the parameters of a Medicare Advantage plan, you could really drive some savings.”