Planning for retirement isn’t just about saving enough. A crucial—and often underestimated—part of the puzzle is healthcare costs. A new survey from Fidelity reveals that a 65-year-old retiring in 2025 should expect to spend $172,500 on healthcare throughout retirement—a figure that has climbed steadily from just $80,000 in 2002.
Why the Spike in Healthcare Spending?
Since 2002, projected retiree healthcare costs have nearly doubled, significantly outpacing inflation. Over just the past year, Fidelity recorded a 4% increase in expected healthcare spending.
These projections cover Medicare premiums, prescription drug costs, and common out-of-pocket medical expenses like copays and deductibles—but they do not include expenses like dental care, long-term care, or over-the-counter medications.
Common Misconceptions About Medicare
Many retirees mistakenly assume Medicare will cover most of their medical needs, but financial advisors stress that’s far from the truth.
Melissa Cox of Future-Focused Wealth in Dallas points out that helping clients slow down and clearly understand what is and isn’t covered is often the first and most essential step.
Start Planning Early
Getting a head start makes a big difference. Advisors recommend exploring options like Medigap, long-term care insurance, and life insurance with care-related riders while you’re younger and healthier. Delaying can make eligibility tougher—and premiums higher.
Andrew Crowell of D.A. Davidson emphasizes that even minor delays can cut people off from affordable plans or coverage altogether.
If Retirement Is Already Here—What Can You Do?
It’s never too late to adjust. Advisor Beau Kemp recommends that clients reassess their priorities: delay retirement, adjust budgets, or downsize lifestyle expectations to accommodate rising healthcare costs.
The goal is clear: don’t shrink the projected medical expenses—rather, focus on what can be controlled to preserve both financial security and peace of mind.