Healthy? You'll spend more on health care in retirement

The healthier you are, the more money you need to save for health care in retirement.

That’s the counterintuitive finding of new research by the Empower Institute, which is sponsored by Empower Retirement, a division of Great-West Financial that administers $440 billion in retirement plans.

“Excellent health, ironically, can actually raise an individual’s lifetime health spending” simply because healthier people can generally expect to live longer, says the report, released Wednesday.

For example, Empower calculates that, a 65-year-old man with Type 2 diabetes should have about $88,300 accumulated for medical costs, versus $114,900 for a tobacco user and $143,800 for someone in good health. The reason: With diabetes, his life expectancy is 78, versus 81 for a tobacco user and 87 for a 65-year-old man in good health. These figures are in today’s dollars and are estimates of the amounts required to provide a 90% probability of being able to cover lifetime medical expenses.

Empower is among a growing number of financial-services companies that are publishing data to help people assess whether they’re on track to cover these costs. Health care comprises about one-third of spending for Americans 60 years old and up, according to analysts at Credit Suisse Group AG .

While a healthy 65-year-old man needs to have saved about $144,000, a healthy woman of the same age should have put away $156,000 to have a 90% chance of having enough, Empower says. The savings goal for women is higher because they live longer on average.

Empower’s figures for healthy men and women are fairly consistent with projections from others, including Fidelity Investments and the nonprofit Employee Benefit Research Institute.