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Posted on 07/30/2026 9:50:20 PM PDT by SeekAndFind
Millions of Americans spend decades preparing for retirement, only to discover one of the biggest expenses isn’t housing, travel, or taxes. It’s healthcare.
A new estimate from Fidelity suggests that a 65-year-old retiring today should expect to spend $185,500 on healthcare throughout retirement. That’s a 7.5% increase from last year and the steepest annual jump in more than a decade.
Even more concerning, more than half of Americans approaching retirement don’t realize Medicare leaves them responsible for thousands of dollars in costs.
According to Fidelity’s 25th Annual Retiree Health Care Cost Estimate, a typical 65-year-old retiring in 2026 will need approximately $185,500 to cover medical expenses during retirement.
That’s up from $172,500 just one year ago.
The 7.5% increase marks the largest annual jump since 2015 and reflects several powerful trends working against retirees:
For many retirees, these expenses become one of the largest line items in their retirement budget.
One of the report’s most striking findings wasn’t the dollar figure.
It was that 54% of pre-retirees incorrectly believe Medicare will pay all of their healthcare costs.
The reality is far different.
While Medicare provides valuable coverage, retirees are still responsible for numerous expenses including:
Many retirees don’t realize these expenses continue year after year.
Fidelity broke down the projected lifetime healthcare costs into several major categories.
Approximately 45% comes from Medicare Part B and Part D premiums.
Another 48% comes from deductibles, copays, coinsurance, and other out-of-pocket medical expenses.
The remaining 7% represents prescription drug costs paid directly by retirees.
For 2026, the standard Medicare Part B premium alone is $202.90 per month, before considering drug coverage or supplemental insurance.
The report also highlights important differences between Medicare’s two primary coverage options.
Traditional Medicare offers broad access to healthcare providers but has no annual limit on out-of-pocket spending unless retirees purchase supplemental Medigap coverage.
Medicare Advantage plans often include prescription drug coverage and cap annual out-of-pocket costs. However, they generally require beneficiaries to stay within provider networks or pay significantly more.
For 2026, Medicare Advantage plans may cap annual out-of-pocket costs at:
Many plans choose lower limits, but costs can still be substantial depending on medical needs.
Perhaps the most important detail in Fidelity’s estimate is what it doesn’t include.
The $185,500 projection excludes long-term care.
Medicare generally does not pay for ongoing assistance with activities such as:
Those expenses can easily reach hundreds of thousands of dollars over a retirement, depending on health needs and where someone lives.
For workers who haven’t yet enrolled in Medicare, a Health Savings Account (HSA) remains one of the most powerful retirement planning tools available.
HSAs offer three significant tax advantages:
Unlike Flexible Spending Accounts, HSA balances never expire and can continue growing for decades if invested.
Once someone enrolls in Medicare, they can no longer make new HSA contributions, but existing balances can still be used to pay many qualified medical expenses, including Medicare Part B and Part D premiums.
Healthcare inflation has historically risen faster than overall inflation, making cash savings alone increasingly difficult to keep pace.
While many HSA holders leave their balances sitting in cash, long-term investors often choose to invest at least part of their accounts in diversified portfolios that have greater potential to outpace rising medical costs.
New investment products are even beginning to target healthcare inflation specifically, reflecting growing concern that medical expenses could become one of retirement’s largest financial risks.
Healthcare has become one of the most overlooked expenses in retirement planning.
Fidelity’s latest estimate suggests today’s retirees should prepare for $185,500 in lifetime healthcare costs—even before factoring in the potentially enormous expense of long-term care.
For Americans who assume Medicare will cover everything, that misunderstanding could become one of the costliest retirement surprises they’ll ever face.
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Best decision I ever made was to join the reserves after I got out of the Army, now retired I get Tricare coverage for myself, wife and daughter.
Like my best friend said as we talked on the phone during his kidney dialysis session at the VA a few years ago, he said the best thing that ever happened to him was me tricking him into joining the Army with me during the Vietnam War, it takes care of my medical stuff also, and that is quite a deal.
At almost 75 years old,
and 3 ambulance rides in the last year or so,
and all of the associated bills that go with it,
I now understand how old folks go bankrupt.
I sure didn’t see my situation coming.
The V.A. has been a Godsend.
Amen Brother!
Medicare has taken care of the majority of my medical bills, lab work, medical procedures (colonoscopy/broncoscopy), two surgeries, physical and occupational rehab, along with a four week home physical therapy program. I’m only responsible for the office visit co-pays, which are $25 or less. My secondary insurance is with the State of New York, which I have because I’m a retiree from a State job. The only thing they usually pay out on since Medicare kicked in, is for my meds. I have a Medicare approved prescription plan with them, and pay $5 or less for scripts. After I retired, and before I became Medicare eligible, my State plan was my primary insurance. I had no other until Medicare kicked in. During that time, they paid for all my doctor appointments, and 3 of my four abdominal surgeries, and my scripts. I was just responsible for the co-pays. I can’t complain. I’ve been retired 23 years so far. And I also can’t complain, because NY State reimburses me the cost of Medicare, so I’m basically paying for just the insurance with NY State.
I had one ride in an ambulance in my almost 79 years. It was this past December 26th when I fell on black ice in my parking lot, and fractured my left femur. I have Medicare and as a retiree, secondary insurance with NY State. My co-pay for the ambulance was $70.00. The bill was $400 for a 10 minute ride.
Between Medicare A & B, my retiree insurance, my wife’s retiree insurance and Tricare I’ve never paid a penny out of pocket for anything.
Medicare A&B and a secondary. It’s a monthly bill. A reasonable yearly deductible
$175,000.00? Ok so it adds up. People who expect it to be cost free have bought into socialism
And they need to investigate socialized medicine in the UK and Canada. It’s not what they think it is
.
If you live to your 90’s it will cost far more than that. Definitely our biggest expense and concern in retirement.
The #1 cause of bankruptcy is the inability to pay medical expenses.
I work for large, private companies.
When I retired, I got Medicare.
My costs jumped up a lot!
Honestly!
Traditional Medicare is NOT particularly good healthcare plan.
But I’ve savings and I like to pick and choose my doctors!
It’s true for us, i.e., healthcare taking the biggest bite out of our finances. And we’re not suffering anything catastrophic, but are just typical older folks.
We don’t have a mortgage, but if/when the time comes to move to assisted living or similar housing could skyrocket, I suppose.
The VA...giving veterans a second chance to die for their country since 1930.
I have Medicare A and B with Kaiser Permanente. I often wonder what it doesn’t cover.
I had one ambulance ride when I had a stroke. Had to be transported to a larger hospital. I still had employer health insurance. Because the hospital dragged its feet filing with insurance, my $3000 deductible was split between 4 providers. Ambulance was over half of it.
We signed up for MASA the next year- all future ambulance rides are paid for.
I can testify to that, the VA is clean, shiny, friendly, and sub par in medical care, and vets die prematurely and endure medical issues that aren’t diagnosed and fixed because of it.
“Ambulance was over half of it.”
Your actual bill is 1/3 of that but you have to pay for the other 2 people who didn’t pay for their ride.
A good collection rate is 1/3. Many don’t do nearly as good.
Oh the stories I could tell...
“I called y’all because I would have to pay for a taxi.”
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