By SR Staff
A 65-year-old retiring this year can expect to spend roughly $185,500 on healthcare for the rest of their life, according to Fidelity's 2026 Retiree Health Care Cost Estimate. For a couple, that number climbs to $371,000. It's up 7.5% from last year alone — the biggest single-year jump the estimate has seen in years, and it doesn't even include long-term care.
Most people budget carefully for housing, travel, and everyday spending in retirement. Healthcare is different. It's harder to predict, easy to underestimate, and often the line item that derails an otherwise solid plan. Here's what's actually driving these costs, where the biggest gaps hide, and how to build a plan that can absorb the surprise.
Why Healthcare Is Retirement's Biggest Unknown
Unlike a mortgage payment or a grocery bill, healthcare spending in retirement doesn't follow a predictable curve. It depends on your health, your genetics, how long you live, and how medical costs evolve over the next 20 or 30 years — all of which are impossible to know in advance.
That unpredictability is exactly why it deserves its own line in your retirement plan rather than getting folded into "miscellaneous expenses." Fidelity's estimate breaks the $371,000 couple's figure into three buckets: Medicare Part B and Part D premiums account for 45%, deductibles and coinsurance for other medical care make up 48%, and prescription drug costs cover the remaining 7%. In other words, this isn't a worst-case scenario involving a major illness — it's what routine coverage costs a healthy retiree over time.
What the Estimate Includes — and What It Doesn't
Fidelity's figure assumes enrollment in Original Medicare (Parts A and B) plus a Part D prescription drug plan. It covers premiums, cost-sharing, and out-of-pocket spending on medical care and medications for the rest of a retiree's life. What it leaves out matters just as much:
- Dental, vision, and hearing care — none of which Original Medicare covers
- Long-term care — a separate and potentially much larger expense
- Income-related surcharges that push premiums higher for higher earners
- Health insurance before age 65, for anyone retiring early
That last point is worth sitting with, because it's a gap many pre-retirees miss entirely.
The Coverage Gap Before Medicare
Medicare eligibility starts at 65. If you retire earlier — a growing trend among pre-retirees chasing financial independence — you're on your own for coverage until then. Options include COBRA (typically expensive and time-limited), a spouse's employer plan, or an ACA marketplace plan, which can run several hundred to well over a thousand dollars a month depending on income, age, and location. This gap is often the single biggest healthcare risk for early retirees, and it deserves its own budget line rather than an assumption that "something will work out." If you're weighing an early exit, run the marketplace numbers for your state and age before you give notice, not after.
Medicare Premiums Aren't Flat — Income Changes the Math
The standard 2026 Medicare Part B premium is $202.90 a month, but that's only the baseline. Higher earners pay more through the Income-Related Monthly Adjustment Amount, or IRMAA, which uses a two-year lookback on your tax return. For 2026, IRMAA surcharges kick in once modified adjusted gross income exceeds $109,000 for single filers or $218,000 for joint filers, and premiums can climb as high as $689.90 a month at the top bracket, plus a separate Part D surcharge. This is one reason Roth conversions, capital gains timing, and required minimum distributions deserve coordination in the years leading up to and during Medicare enrollment — a large one-time income spike can trigger IRMAA surcharges two years later, even in an otherwise low-income year.
The Wildcard Within the Wildcard: Long-Term Care
Everything above assumes routine medical care. Long-term care is a different animal entirely, and it's excluded from Fidelity's estimate. According to CareScout's most recent cost of care survey, a private nursing home room now runs about $115,988 a year nationally, and assisted living averages roughly $70,349 a year — with costs varying dramatically by state. Medicare generally does not cover extended long-term care, which means this cost falls to savings, long-term care insurance, or Medicaid after assets are largely depleted. It's a big enough topic that it merits its own plan — see our guide to paying for long-term care for a full breakdown of the options.
Building a Healthcare Buffer Into Your Plan
None of this means healthcare costs are unmanageable — it means they need a deliberate strategy rather than an afterthought. A few practical steps can make a real difference:
- Max out an HSA while you're still working. If you have access to a high-deductible health plan, a Health Savings Account offers triple tax advantages and can be invested and left to grow for use in retirement.
- Treat healthcare as its own budget category, not part of general living expenses, when projecting your retirement income needs.
- Price out coverage before you retire early, especially if retirement comes before age 65.
- Coordinate income timing around Medicare enrollment to avoid unnecessary IRMAA surcharges.
- Have an honest conversation about long-term care — insurance, self-funding, or a hybrid approach — well before it's needed.
Building intentional savings earmarked for healthcare, separate from your everyday retirement fund, gives you flexibility if costs run higher than expected — which, based on recent trends, is the more likely direction.
The Takeaway
Healthcare will likely be one of the largest expenses you face in retirement, and it's also one of the most planned-around, once you know the real numbers. The $185,500 to $371,000 range from Fidelity isn't a reason to panic — it's a reason to build a specific plan: fund an HSA now, budget healthcare separately, understand your coverage gap if you retire early, and have a long-term care strategy before you need one. Start with the numbers that apply to your situation, and healthcare becomes a manageable part of your plan instead of its biggest wildcard.
Written by: Seeking Retirement