Retiree healthcare tab climbs to $185,500, Fidelity says
A 65-year-old retiring in 2026 faces a higher lifetime medical-cost estimate, and long-term care is not included in the tally.
By Sal Moretti · Money Reporter
3 min read
A 65-year-old leaving work in 2026 should expect to spend an average of $185,500 on healthcare and medical costs over retirement, according to Fidelity Investments.
The new estimate is 7.5% higher than last year’s figure, Fidelity said. The firm pointed to rising prices for care, heavier use of medical services as people age and the growing expense of treating chronic conditions.
The number covers a retiree enrolled in traditional Medicare Part A and Part B, plus Part D prescription-drug coverage, according to Fidelity. It includes Medicare premiums, out-of-pocket drug costs and medical expenses such as copays, coinsurance and deductibles for doctor and hospital care.
One big caveat: the $185,500 figure does not include long-term care.
Medicare does not pick up every tab
Fidelity said its annual estimate is meant to give Americans a benchmark for one of retirement’s largest costs. This year’s increase was steeper than the 4% rise in last year’s forecast.
Shams Talib, head of Fidelity Workplace Consulting, said retirement planning involves more than hitting a savings number. As Americans stop working, ease into retirement or find other ways to stay active, Talib said healthcare remains one of the biggest bills they face.
Fidelity’s report lands as more than 11,000 Americans are turning 65 each day through 2027. The firm also noted that longer lifespans mean retirement can stretch for decades, while healthcare costs continue to rise faster than inflation.
Medicare remains central to retirement health coverage, but Fidelity said many future retirees overestimate how much it will cover. According to the firm, 54% of preretirees wrongly believe Medicare will pay for all of their health expenses.
Steve Betts, head of Fidelity Health, said Medicare is an essential part of coverage in retirement, but does not wipe out every medical bill. Fidelity said retirees and preretirees should consider out-of-pocket costs as part of their retirement-income planning.
Long-term care is a separate bill
Fidelity said it leaves long-term-care costs out of the forecast because expenses can vary widely based on health, family history and location. That category can include home healthcare support, assisted living and extended nursing-home stays.
CareScout data cited in the report shows how quickly those costs can climb. A nonmedical caregiver at home costs more than $80,000 a year, based on 44 hours of weekly care, while the median annual cost of assisted living is $74,400. A private room in a nursing home has a national median rate above $129,000 a year, according to CareScout.
The U.S. Department of Health and Human Services says 70% of adults who make it to age 65 develop severe long-term services and support needs before death. The department says 48% receive some paid care during their lifetime.
Those services can include medical and personal-care help, such as medication management and assistance with bathing, dressing, eating, walking and toileting, according to the department.
HSAs get a fresh look
Fidelity’s calculation assumes traditional Medicare, though the firm noted that more than half of Medicare beneficiaries are enrolled in Medicare Advantage plans, the private-insurance alternative to the federal program.
Ryan Viktorin, a Fidelity vice president and financial consultant, said the overall retirement healthcare total may look intimidating, but those costs are likely to be spread across decades.
Fidelity said people eligible for a health savings account may want to consider using one. HSAs are available only to people with high-deductible health-insurance plans, and the money can be used for qualified medical expenses.
According to Fidelity, 25% of Americans are contributing to an HSA to help cover healthcare costs in retirement. Contributions can be made pretax, withdrawals for qualified medical expenses can be tax-free and potential investment growth can be tax-free as well.
Fidelity said HSA balances roll over each year and stay with account holders regardless of where they work. The firm also said 40% of Americans do not invest their HSA funds, which can limit potential growth.
This story draws on original reporting from MarketWatch.