A new analysis from Fidelity Investments warns that a 65-year-old retiring this year can expect to spend $185,500 on healthcare and medical expenses over their lifetime. That figure marks a 7.5% jump from last year's estimate of $172,500 and has more than doubled since Fidelity began tracking in 2002.
The increase, nearly twice the size of the prior year's rise, reflects climbing prices for medical care, higher utilization rates, and growing costs tied to chronic conditions, according to the financial services firm. The projection comes as roughly 4 million Americans turn 65 each year through 2027, reshaping the nation's retirement landscape.
Fidelity's 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. However, it does not account for long-term care expenses, which can add significant financial strain.
More than half of preretirees—54%—mistakenly believe Medicare will cover all their health expenses, Fidelity found. “Medicare is a critical part of retirement health coverage, but it does not eliminate every health care expense,” Steve Betts, head of Fidelity Health, said in a statement.
The gap between expectations and reality is fueling policy debates. Half of U.S. adults now struggle with healthcare costs, a recent poll shows, underscoring the financial pressure on retirees and workers alike. Meanwhile, House lawmakers are weighing stronger price transparency rules to cut waste, a move that could help curb rising expenses.
Long-term care adds another layer of risk. A recent Health and Human Services Department analysis estimated that 56% of people turning 65 between 2021 and 2025 will need some form of long-term care. Consulting firm Milliman calculated that 65-year-olds should set aside $135,000 for future paid long-term care costs.
Combined, these estimates highlight the need for comprehensive retirement planning that goes beyond daily living expenses. The financial burden is also keeping some Americans in the workforce longer than intended. Nearly 1 in 4 U.S. workers—about 23 million adults—say they are staying in their current job despite wanting to leave, fearing the loss of health insurance, according to a West Health-Gallup study.
As the demographic wave of aging baby boomers continues, the pressure on both personal savings and public programs like Medicare is intensifying. The 2027 Social Security COLA estimate holds at 3.8% as reform efforts stall, adding to the uncertainty for retirees counting on fixed incomes.
Fidelity's data serves as a blunt reminder: without disciplined saving and a clear understanding of Medicare's limits, many retirees could face a steep financial climb in their later years.
