If you're like most people in their 50s and early 60s, you haven't started saving for the medical care you'll need after you stop working.
Only about a third of such Americans have tried to estimate how much money they'll need and have set aside money for those expenses, according to a recent survey by the retiree advocacy group AARP.
The survey found that more than four in 10 adults between 50 and 64 (or 42 percent) think they'll need less than $100,000 to cover out-of-pocket health expenses during their retirement. Sixteen percent think they'll need less than $50,000.
That suggests many people are in for a rude awakening. An average couple retiring at age 65 this year is estimated to need $220,000 for their out-of-pocket health care costs in retirement, according to Fidelity Investments.
The catch with such estimates, of course, is that your personal situation can differ. AARP is introducing a new online health-costs calculator to help people obtain a more customized estimate.
The new tool, created with OptumHealth, a unit of UnitedHealthcare, has been in the works for several years and is based on a proprietary database of more than $136 billion in insurance claims. The tool is available free on AARP's website.
You don't have to register or give your name or address to use the tool, but you will need to enter information such as your age, gender, height and weight, as well as where you expect to live in retirement. (The site says it doesn't collect any personal information on users.) Then, you click on a list of 82 medical conditions — like diabetes, arthritis, heart disease or anxiety — to build a health profile. The tool assumes users have coverage under traditional Medicare, the federal health insurance program for people 65 and older.
The tool shows an estimated total tab; what portion Medicare is expected to cover; and what your out-of-pocket costs may be. It also offers suggestions for improving your health to help lower your costs.