A 65-year-old retiring this year can expect to spend $185,500 on healthcare and medical expenses throughout their retirement years, according to new estimates from Fidelity Investments released Thursday. The figure represents a 7.5% increase from the firm's 2024 estimate of $172,500 and is more than double its inaugural estimate from 2002.
The jump reflects rising prices for care, increased utilization by retirees, and growing costs tied to chronic conditions, according to Fidelity's analysis. Steve Betts, head of Fidelity Health, said in a statement that the estimates serve as an important reminder for Americans planning for retirement.
The latest projections arrive during a major demographic transition, with roughly 4 million Americans turning 65 each year through 2027, according to census data cited by Fidelity.
Fidelity's $185,500 estimate assumes retirees are enrolled in Medicare Parts A, B and D and includes premiums, copayments and other out-of-pocket costs for medical care and prescription drugs throughout retirement. The projection does not include long-term care expenses, which can add significantly to the financial burden for retirees who eventually need such services.
What the Right Is Saying
Conservative commentators and some policy experts say Fidelity's estimates highlight the importance of personal financial planning rather than government solutions. They argue that expanding Medicare benefits would increase costs for all workers through higher taxes or worsen the program's long-term fiscal problems.
The American Enterprise Institute has argued that the focus should be on increasing competition in healthcare markets, reducing regulatory barriers, and encouraging Americans to save more for retirement rather than relying on government programs to cover every expense. Critics of expansion proposals say adding new Medicare benefits without addressing underlying cost growth would only postpone difficult decisions about spending priorities.
Representative Jason Smith (R-MO), chairman of the House Ways and Means Committee, has emphasized the need to protect and strengthen Social Security and Medicare for future generations through fiscal responsibility rather than tax increases that could discourage economic growth.
What the Left Is Saying
Progressive advocates point to Fidelity's findings as evidence that the American healthcare system places an unsustainable financial burden on seniors. They argue that Medicare should be expanded to cover more of these costs and call for new protections against medical debt.
Senator Bernie Sanders (I-VT), who has long championed expanding Medicare, said in a recent Senate hearing that the United States spends far more per capita on healthcare than any other major nation while leaving millions of seniors struggling with costs that other countries' systems would cover. He has proposed legislation to lower the eligibility age for Medicare to 50 and expand dental, vision, and hearing coverage.
Advocacy groups such as Social Security Works argue that these rising estimates underscore the need to strengthen rather than cut programs like Medicare. They point out that more than half of preretirees incorrectly believe Medicare will cover all their health expenses in retirement, suggesting a significant gap in public understanding about what the program actually covers.
What the Numbers Show
The $185,500 estimate reflects a 7.5% year-over-year increase from Fidelity's 2024 figure of $172,500. The current projection is more than double Fidelity's inaugural estimate of approximately $85,000 made in 2002.
A recent analysis for the Department of Health and Human Services estimated that 56% of people turning 65 between 2021 and 2025 will need some form of long-term care during their lifetime. Consulting firm Milliman separately estimated earlier this year that 65-year-olds should set aside $135,000 to cover future paid long-term care costs.
The two estimates combined suggest total potential healthcare-related expenses of approximately $320,500 per retiree over their lifetime, not accounting for inflation or changes in healthcare pricing.
According to a new study from the West Health-Gallup Center on Healthcare in America, nearly 1 in 4 U.S. workers—about 23 million adults—say they are staying in their current job even though they want to leave because they fear losing health insurance coverage.
The Bottom Line
Fidelity's estimates underscore the financial reality facing millions of Americans approaching retirement age during a period of rising healthcare costs and demographic change. With 4 million people turning 65 annually through 2027, the intersection of healthcare expenses and retirement planning represents a significant policy challenge.
Experts recommend that those approaching retirement review their Medicare options carefully, consider supplemental insurance coverage, and plan for out-of-pocket expenses not covered by federal programs. Financial advisors often suggest that retirees budget more conservatively than they might expect for medical costs as estimates have consistently risen over time.
The gap between public expectations about Medicare coverage and what the program actually provides remains substantial, with 54% of preretirees surveyed incorrectly believing Medicare will cover all their health expenses in retirement.