BOSTON (4/7/10)--Consumers looking for incentives to save for retirement need look no further than health care costs. A new study from the Center for Retirement Research (CRR March) at Boston College suggests health care will cost the typical married couple age 65 about $197,000 over the rest of their lifetimes. These costs include insurance premiums, out-of-pocket costs, and home health care costs. But that estimate does not include costs for nursing home care, which could boost lifetime health care costs for that couple to $260,000. On a worst-case basis, according to the report, there is a 5% chance costs could exceed $570,000. It is unclear how the new health care reform act would change CRR calculations, but the report nevertheless shows how health care costs represent a substantial risk for all households. "Even at the peak of the stock market in 2007, less than 15% of households approaching retirement had accumulated that much ($570,000) in total financial assets, much less financial assets available for health care costs," the report says. Prudential Financial, a Newark, N.J.-based provider of life and health insurance, provided support for the research paper, co-authored by Anthony Webb, associate director for research at the Boston College CRR, and Natalia Zhivan, a consultant for the CRR. Cost estimates in the report, "What Is The Distribution of Lifetime Health Care Costs From Age 65," are consistent with other research findings. About one-third of people turning 65 this year will need at least three months of nursing home care, 24% more than a year, and 9% more than five years, according to the report. The average annual cost for a stay in a nursing home is about $71,000 for a semi-private room. "These numbers are eye popping," noted Susan Tiffany, editorial director for the Credit Union National Association's online Web products Plan It and Home & Family Finance Resource Center. "There’s plenty of evidence to suggest that it will take big money to live well in retirement: As a nation, we’re living longer, which means our nest eggs will have to last longer. Inflation in the cost of health care also is a major consideration, and health is strongly correlated with financial wherewithal. The respected Health and Retirement Study from the University of Michigan, Ann Arbor, indicates that average household net worth is more than $400,000 when both spouses are in excellent health, but only $31,000 when they are in poor health," Tiffany said. If there’s good news, it is that spending tends to fall rather than rise following retirement and continues to fall rather than rise with inflation. That’s because people older than age 75 typically spend about one-quarter less each year than those age 65 to 74, according to the Department of Labor’s Consumer Expenditure Survey. So, inflation will eat up some portion of your income, but you will be inclined to spend less as you become less active. But health care costs remain the No.1 question mark for people planning their retirement finances, Tiffany noted.