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, a recent EBRI study says.

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, the institute said.

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

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

“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 says. “Long-term-care costs can be pretty significant.”

For the first time, the institute also looked at how Medicare Advantage plans, which many retirees are choosing to control costs, compare with 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, which meant paying more out of pocket as care was needed.

Under the Advantage plan, 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 with the Advantage plan 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,” Spiegel says. “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. But if you’re willing to put in the legwork 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.”