Medicare covers only 59% of the cost of health care for seniors - and retirees can expect to pay an even larger share in the future. In fact, a couple aged 65 might need $387,000 saved in order to be confident of covering their health care costs in retirement, not including outlays for long-term care, finds a report from the Employee Benefit Research Institute.

Going forward, EBRI predicts that "individuals can expect to pay a greater share of their costs out of pocket because of the combination of the underfunded financial condition of the Medicare program and cutbacks to employment-based retiree health programs." To put numbers on how much seniors will need, EBRI used a Monte Carlo simulation model; it came up with estimates based on enrollment in original Medicare, supplemented with a Plan F Medigap policy and a Medicare Part D plan for prescription drug coverage.

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