The amount of money retirees need to set aside for medical expenses dropped 8 percent this year, though the dollar figures are still considerable. 

According to new data from Fidelity Investments, a 65-year-old couple retiring in 2013 will need $220,000 to cover medical expenses throughout retirement compared to $240,000 last year. The study assumes a life expectancy of 85 for women and 82 for men.

The estimate decreased in 2013 because of lower-than-expected Medicare spending in recent years, as well as a reduction in projected Medicare spending in the near future.

The decrease is significant since Fidelity's estimates had increased 6 percent per year, on average, between 2002 and 2012. The estimate decreased only once before in 2011 due to changes in the Obama administration's health care overhaul, which have reduced seniors' out-of-pocket spending on prescription drugs.

Americans continue to drastically underestimate how much money they're likely to spend on health care during retirement. A recent poll of people in their 50s and 60s conducted by Fidelity found that nearly half of respondents think they will need just $50,000 to cover medical expenses. 

Fidelity's projections assume that a 65-year-old couple retires this year with Medicare coverage and no additional coverage from former employers. The estimate factors in the federal program's premiums, co-payments and deductibles, as well as out-of-pocket prescription costs. The estimate doesn't factor in most dental services, or long-term care, such as the cost of living in a nursing home.

Fidelity has calculated an annual estimate of medical expenses for retirees since 2002. For most Americans, health care costs will be the largest expense during retirement. The estimates provided by Fidelity don't include any costs associated with nursing home care and they apply to retirees with traditional Medicare insurance coverage.

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