While health care costs are inevitably going to rise in the future, a 65-year-old couple retiring in 2011 will likely spend $230,000 on health care throughout their retirement, Fidelity estimates. This is an 8% decline from the $250,000 retiring couples in 2010 will need, due to recent changes in Medicare, Fidelity said.

This is the first decrease in the estimated costs since the initial calculation of $160,000 in 2002. In the intervening years, health care costs have consistently risen 6% a year.

The $20,000 drop is due to Medicare changes in the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act that were signed into law in 2010, reducing out-of-pocket expenses for prescription drugs for many seniors.

"While the savings generated through the healthcare reform laws is a welcome relief to many seniors, it should be considered a one-time adjustment, at least for the time being," says Brad Kimler, executive vice president of Fidelity’s benefits consulting business. "Today’s workers still face the prospect of significant medical expenses in retirement and must begin to include those costs in their retirement plan strategies."

Kimler adds: "Looking forward over the next few years, Americans should expect healthcare expenses to continue to increase annually due to a number of factors including higher costs for medical services, the introduction of new technology and an increased utilization of healthcare services like diagnostic testing."

In a recent Fidelity survey, 68% of pre-retirees said the cost of medical care in retirement is one of their three biggest financial concerns, along with outliving savings and inflation.

Fidelity recently introduced an online income planning tool, the Fidelity Income Strategy Evaluator, to help investors create a strategy to ensure their retirement savings will cover retirement expenses, including healthcare.

In conjunction with this, Fidelity has created 13 interactive modules to help investors learn more about creating a retirement income plan at http:www.fidelity.com/incomeguide.

Barney is the editor of Money Management Executive, a SourceMedia publication.

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