New research from the Employment Benefit Research Institute (EBRI) updates previous estimates of how much money Medicare beneficiaries are projected to need to cover health expenses in retirement, including premiums for Medicare Parts B and D, premiums for Medigap Plan F, and out-of-pocket spending for outpatient prescription drugs.

The analysis shows that retiree health savings targets increased from 2014 to 2016, but that 2016 savings targets continue to be lower than they were in 2012 almost across the board. Specifically:

• In 2016, a 65-year-old man would need $72,000 in savings and a 65 year-old woman would need $93,000 if each had a goal of having a 50 percent chance of having enough savings to cover health care expenses in retirement. If they wanted a 90 percent chance of having enough savings, the man would need $127,000 and the woman would need $143,000.

• A couple with median prescription drug expenses would need $165,000 if they had a goal of having a 50 percent chance of having enough savings to cover health care expenses in retirement. If they wanted a 90 percent chance of having enough savings, they would need $265,000.

• For a couple with drug expenses at the 90th percentile throughout retirement who wanted a 90 percent chance of having enough money saved for health care expenses in retirement by age 65, targeted savings would be $349,000 in 2016.

Individuals should be concerned about saving for health insurance premiums and out-of-pocket expenses in retirement for a number of reasons. Medicare generally covers only about 62 percent ofthe cost of health care services for Medicare beneficiaries ages 65 and older, while out-of-pocket spending accounts for 13 percent. Furthermore, the percentage of private-sector establishmentsoffering retiree health benefits has been falling. This is also true in the public sector.

It is important to note that many individuals are likely to need more than the amounts cited in this report. This analysis does not factor in the savings needed to cover long term care expenses and other expenses not covered by Medicare, nor does it take into account the fact that many individuals retire prior to becoming eligible for Medicare. However, some workers will need to save less than what is reported if they choose to work past age 65, thereby postponing enrollment in Medicare Parts B and D if they receive health benefits as active workers.

The full report is online at http://bit.ly/2l0nu7l.