Fidelity Investments Now Says You Can Expect to Spend Around $185,000 on Healthcare Expenses in Retirement. Here's How I'm Planning for It.

Fidelity Investments routinely crunches the numbers to learn how much money a new retiree can expect to spend on healthcare costs in retirement. The latest finding comes in at a whopping $185,000.

As large as that number is, part of figuring out how much we need to retire involves making a list of our expected expenses, which makes it impossible to avoid healthcare. After years of avoidance, I finally stumbled on a plan that could make paying for healthcare in retirement a little easier.

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What the estimate includes

Fidelity's 2026 Retiree Healthcare Cost Estimate assumes a 65-year-old retiring and enrolling in Original Medicare (Parts A and B), plus Part D. It also includes:

• Monthly Medicare premiums
• Medical co-payments
• Medical coinsurance
• Deductibles for things like hospitalization and outpatient services
• Co-payments and amounts not covered by Medicare Part D

The study did not include the cost of long-term care, or benefits like vision and hearing exams.

My plan

In addition to factoring medical expenses into our monthly postretirement budget, I'm working on the following:

• Creating a healthcare bucket: To reduce the stress of receiving a large medical bill, I'm keeping a separate "healthcare bucket" distinct from our general retirement funds, aiming for 10% of our total retirement savings.
• Using Medicare coverage strategically: I plan to comparison-shop annually, even if I'm satisfied with our current plan. The plan you choose matters. For example, healthier retirees can expect to spend approximately 9% less on healthcare costs with a Medigap plan, and 27% less with a Medicare Advantage Prescription Drug (MAPD) plan.
• Managing health: One of the most statistically effective ways to reduce healthcare costs in retirement is to stay or become healthier. I realize that either my husband or I could be impacted by an unexpected illness or hit by a bus crossing the street. However, it can't hurt to do what we can to remain healthy.
• Timing retirement: The longer we wait to claim Social Security, the higher our monthly benefits will be, and that extra money could help cover medical expenses. For example, if your full retirement age (FRA) benefit is $1,500 per month, claiming Social Security at age 62 would mean receiving only around $1,125 per month, while waiting until 70 would boost your benefit to around $1,860 per month.

A bit of good news

The silver lining here is that you don't pay for all your medical care at one time. Fidelity's estimate includes expenses that will be spread out over the rest of your life. For example, the monthly premium for Medicare Part B -- the portion that pays for doctor's visits and other medical services not covered by Part A -- is $202.90 (although low-income individuals may qualify for assistance and pay less).

Looking solely at the Part B premium of $202.90 per month, you'll pay $2,435 annually, or $73,044 over the course of a 30-year retirement. The point is that you'll pay most of these expenses a little at a time over the decades. Simply knowing that fact can help you create a postretirement budget that accounts for the slow trickle of funds you're likely to spend on medical care.

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