Fidelity Investments Estimates $240,000 Needed to Pay Health Care Costs in Retirement

Annual Cost Estimate Up 50% Since 2002
BOSTON--(Business Wire)--
A 65-year-old couple retiring in 2009 will need approximately $240,0001 to cover
medical expenses in retirement2 even with Medicare insurance coverage, according
to Fidelity Investments` latest health care cost estimate. This figure is a 6.7
percent increase over the 2008 estimate of $225,000.

Fidelity Investments has calculated an annual retiree health care cost estimate
since 2002. For many Americans, health care is likely to be their largest
expense in retirement. Over the past seven years, the amount needed for retiree
health care costs has jumped $80,000 or 50 percent from $160,000 in 2002.

"American households, already under strain from the difficult economy, are
facing another challenge to their financial security in retirement as medical
costs continue to rise steadily," said Brad Kimler, executive vice president of
Fidelity`s Consulting Services business, which calculated the retiree health
care cost estimate. "With employee-sponsored retiree health care coverage on the
decline nationwide, it is imperative that today`s workers begin to set aside
money themselves for medical expenses in retirement as part of their overall
retirement strategy."

As in years past, the Fidelity 2009 retiree health care cost estimate assumes
individuals do not have employer-provided retiree health care coverage, but do
qualify for the federal government`s insurance program Medicare. The Fidelity
estimate takes into account cost sharing provisions (such as deductibles and
coinsurance) associated with Medicare Part A and Part B (inpatient and
outpatient medical insurance). It also considers Medicare Part D (prescription
drug coverage) premiums and out-of-pocket costs, as well as certain services
excluded by Medicare.

The estimate does not include other health-related expenses, such as
over-the-counter medications, most dental services and long-term care.

The jump in the retiree health care cost estimate from 2008 to 2009 can be
attributed to a number of factors including higher costs (e.g. for doctor`s
visits, diagnostic tests); increased expenses associated with new technology;
and general price inflation.

To help American workers better manage their health care costs in retirement,
Fidelity offers six suggestions:

Pre-Retirement:

1 Set aside money specifically for medical needs – Rather than
saving generically for retirement, it may help to have a separate and
distinct savings account specifically for medical expenses in
retirement given their essential nature. To achieve the goal,
individuals could use a savings vehicle such as a Health Savings
Account (HSA) devoted solely to this cause or earmark a portion of
their retirement account for this purpose.
2 Investigate the cost of supplemental health insurance in various
geographic locations – Supplemental insurance reimburses
individuals over 65 years old for some or all of their cost-sharing,
not covered by traditional Medicare. In addition to supplemental
insurance, other coverage may also be available (e.g. Medicare HMO).
Medicare’s official Web site (medicare.gov), as well as many state Web
sites list the supplemental health plans available, including those
for Medicare Part D. As individuals approach retirement, they should
become familiar with their plan options, the costs and how these vary
by location.
3 Consider phased retirement as part of an overall strategic plan
– Many employers offer part-time work with health care benefits. This
type of employment can allow pre-retirees to avoid dipping into their
savings accounts too soon for health care needs. By gradually entering
retirement, these individuals will be protecting their savings for a
longer period.

In Retirement:

1 Be proactive in preventive care – There are simple ways to help
contain health care costs. For example, get routine doctor-recommended
screenings for diseases such as colon cancer. If an individual is
otherwise healthy, it is still important to maintain recommended
preventive care guidelines. Taking prescription medications according
to schedule is another way to avoid complications.
2 Select quality providers – On the Web site for the U.S.
Department of Health & Human Services, (www.hospitalcompare.HHS.gov),
there is information available on how well hospitals nationwide are
caring for patients who have certain medical conditions or who have
undergone various surgical procedures. Using a national database of
hospitals, the Web site compares the quality of care of a given
hospital and a given treatment/surgery. Patients at better-performing
hospitals tend to have fewer complications, which reduces the risk of
future additional medical expenses.
3 Always review health claims for accuracy – It is not uncommon
for mistakes to happen in the claims payment process. The error could
be in many forms, including charges for services not rendered or
incorrect charges for a given service. When retirees receive medial
bills, they should take the time to review them and follow up with
their health care provider when they have questions or concerns about
billing.

Fidelity offers guidance to help individuals budget for health care expenses in
retirement at the Retirement Resource Center at Fidelity.com. Employees who have
a workplace savings plan with Fidelity also can go to their NetBenefits® Web
site to access a retirement health care calculator. The tool can project future
health care costs after factoring in a person`s age, location, retirement date
and number of family members. For employers who offer the Fidelity HSA®, there
is an enhanced version of the calculator provided by WebMD®, which also
incorporates a person`s detailed health status and allows employees to project
their future HSA accumulation.

Fidelity`s Consulting Services

Fidelity`s Consulting Services business helps mid to large-size employers
nationwide assess the effectiveness of their benefits programs. The business
provides a holistic approach to benefits design, strategy, funding,
communications and delivery by looking at clients` health care and retirement
plans before diagnosing business solutions. The group`s specialties include
retirement and health care plan consulting, custom data administration,
compliance, employee communication and human resource transformation. Consulting
Services has offices in Marlborough, Mass., New York City, San Francisco,
Chicago and Dallas.

About Fidelity Investments

Fidelity Investments is one of the world's largest providers of financial
services, with custodied assets of $2.4 trillion, including managed assets of
nearly $1.2 trillion as of February 28, 2009. Fidelity offers investment
management, retirement planning, brokerage, and human resources and benefits
outsourcing services to 24 million individuals and institutions as well as
through 5,500 financial intermediary firms. The firm is the largest mutual fund
company in the United States, the No. 1 provider of workplace retirement savings
plans, the largest mutual fund supermarket and a leading online brokerage firm.
For more information about Fidelity Investments, visit www.fidelity.com.

Fidelity Brokerage Services Member NYSE, SIPC

300 Puritan Way, Marlborough, MA 01752

Fidelity Investments and the Pyramid Design logo, Fidelity and NetBenefits and
Fidelity HSA are registered service marks of FMR LLC.

WebMD is a registered service mark of WebMD, LLC.

519981.1.0

1 Fidelity Consulting Services 2009

2 Assumes no employer-provided retiree health care coverage and life
expectancies of 17 years for a male and 20 years for a female

Fidelity Investments
Corporate Communications, 617-563-5800

Copyright Business Wire 2009