According to Fidelity, a 65-year-old retiring in 2026 can expect to spend an average of $185,500 on health care during retirement, up 7.5% from last year. A retired couple may spend about $371,000.
The estimate assumes enrollment in Original Medicare (Parts A and B) and Part D and includes out of pocket expenses which may include premiums, deductibles, coinsurance, co-pays and prescription drug costs, but does not include long-term care, which can significantly increase expenses.
Nearly half of these costs come from out-of-pocket medical expenses; 45% from Medicare premiums, and 7% from prescription drugs. However, the actual costs may vary from person to person depending on health outcomes.
Fidelity also found that 54% of pre-retirees incorrectly believe Medicare covers all health care costs, when in fact Medicare leaves retirees responsible for many out-of-pocket expenses, including dental, vision, hearing, and long-term care.
As health care costs continue to rise due to inflation, increased access to care, and chronic conditions, planning for these expenses is essential.
We encourage eligible workers to plan ahead for retirement medical costs which may include using Health Savings Accounts (HSAs), which provide valuable tax advantages to help pay for current and future medical expenses. Basically, an HSA may allow an individual to use any unused money while working to fund medical expenses in retirement.