RISING COST OF HEALTHCARE

Since 2002, Fidelity Investments has estimated what the average person starting retirement will need to pay for healthcare costs. This year, the average amount for a couple, both age 65, is $215,000, up 7.5 percent from $200,000 last year. That assumes they will not have health coverage provided by a former employer.

On average, Fidelity anticipates healthcare costs will rise 7 percent a year in the foreseeable future. Health care inflation will be due primarily to three factors: increased development of and use of new health-related technologies, advances in prescription drugs, and the aging of the workforce.

A couple who earned $60,000 a year before retiring can expect to devote 27 percent of their Social Security benefits to health care this year, and as much as 50 percent in 16 to 18 years from now, according to Fidelity's estimates.

The $215,000 will be eaten up by Medicare Part B and D premiums (32%); Medicare co-payments, deductibles, co-insurance and other cost-sharing items (35%); and prescription drugs (33%). Fidelity cautioned that the $215,000 figure is just an average. Healthcare costs in retirement depend heavily on where retirees live, their health status and their life expectancy.

And, not insignificantly, Fidelity's estimate doesn't include the rising cost of long-term care, the need for which is less predictable than more general health care costs and can vary depending upon where you live.