A 65-year-old couple that retires this year will need a quarter of a million dollars to pay for medical expenses throughout their retirement, representing a 4.2% increase over last year, according to the Fidelity Investments annual Retiree Health care Costs Estimate.

Fidelity has found that even though health care costs during retirement are a significant financial concern for people, many are not doing enough to plan for them.

In fact, three out of 10 retirees who answered the survey identified current health care costs and long-term expenses like paying for a nursing home as their biggest financial concern today.

Yet, only three out of 10 saved specifically for health care needs in retirement during their working years.

Fidelity's nationwide study found that health care costs average $535 a month, second only to food, which averaged $659 a month.

Furthermore, health care costs account for one-fifth of an average couple's total monthly expenses of $2,842.

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