If you have ever wondered how much healthcare will actually cost you in retirement, Fidelity Investments has a number for you. And it is bigger than last year.
According to Fidelity’s 25th annual estimate, a 65-year-old retiring in 2026 can expect to spend an average of $185,500 on healthcare and medical expenses throughout retirement. That is a jump of 7.5% from a year ago.
Fidelity points to three reasons for the increase: rising healthcare prices, more use of medical services, and growing costs tied to chronic conditions.
What Medicare Covers and What It Does Not
The estimate assumes you are enrolled in Original Medicare (Parts A and B) and Medicare Part D, which covers prescription drugs. It includes premiums, copayments, and other out-of-pocket costs. It does not include potential long-term care expenses.
Here is where that $185,500 actually goes:
- 45% goes toward monthly premiums for Medicare Part B and Part D
- 48% covers cost-sharing expenses, things like copayments, coinsurance, and deductibles for hospital visits and outpatient services. This also includes services Medicare does not cover at all, such as vision and hearing exams.
- 7% covers out-of-pocket drug costs, copayments and amounts not covered by Part D for generic, branded, or specialty medications
Why This Number Matters for Your Planning
Steve Betts, head of Fidelity Health, put it plainly: Medicare is a critical part of retirement health coverage, but it does not eliminate every healthcare expense.
Shams Talib, head of Fidelity Workplace Consulting, added that healthcare consistently remains one of the largest expenses retirees will face, whether they stop working all at once, phase into retirement gradually, or find new ways to stay engaged.
The goal of publishing this estimate each year, Talib said, is to give people a benchmark so they can plan with more purpose and confidence.
Fidelity has been producing this report every year since 2002. Think of it less as a scare tactic and more as a planning tool, a way to make sure healthcare costs do not catch you off guard in the years ahead.
