Fidelity Investments projected on July 21 that people retiring in 2026 will spend an average of $185,000 on healthcare costs and medical expenses in retirement. The annual Retiree Health Care Cost Estimate found a 65-year-old retiring this year can expect to spend up to 7.5% more during their retirement than was expected a year ago.
Last year, Fidelity expected a 65-year-old retiring could expect to spend an average of $172,500.
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This year’s increase reflects broader healthcare trends, including rising prices for care, continued growth in the utilization of medical goods and services, and growing costs tied to chronic conditions, according to Fidelity’s report on the estimate.
Cost Drivers
The annual estimate is based on certain assumptions, including that the average retiree is enrolled in Medicare Part A (driving 45% of the cost), which covers inpatient hospital services, skilled nursing facilities, home healthcare and hospice care; Medicare Part B (48%), which covers physician and outpatient hospital services; and Medicare Part D (7%), which includes premiums, co-payments and other out-of-pocket costs for medical care and prescription drugs throughout retirement. Fidelity’s estimate does not include potential long-term-care expenses.
Meanwhile, Medicare reimbursements for hospital and physician services continue to decline, threatening to prevent Medicare beneficiaries from accessing care, according to recent research from the Center for Retirement Research at Boston College.
The Fidelity and the CRR studies come in the same month Milliman released its 2026 Retiree Health Cost Index, which estimated that the average healthy 65-year-old couple retiring this year is projected to spend up to $637,000 on healthcare expenses over the course of their remaining lifetimes. The figure is based on several factors driving up the cost of federal Medigap and Medicare Part B premiums, along with projected growth in long-term healthcare inflation.
The two most common healthcare coverage options chosen by Medicare-eligible retirees on the individual market were Original Medicare (Parts A and B) with Medigap plus part D and Medicare Advantage plus Part D. A healthy 65-year-old man retiring in 2026 with a Medigap plan was projected to spend $297,000 on healthcare in his remaining lifetime, and a woman with the same coverage was expected to spend $340,000, according to the index. A man with MAPD was projected to spend $148,000, while a woman was anticipated to spend $172,000, according to Milliman.
In addition, the “2026 Retirement Healthcare Costs Data Report” from HealthView Services projected a long-term healthcare inflation rate of 5.8% this year, compared with projected Social Security COLAs of 2.4%. In 2026, Medicare Part B and Medicare Advantage premiums deducted from Social Security rose 9.7%, while the Social Security COLA was 3.2%, according to HealthView’s report.
For a healthy 65-year-old couple retiring this year, lifetime healthcare costs were projected to total $661,812 in 2026 dollars, or $955,411 in future value, according to HealthView. The firm estimated that 84% of lifetime Social Security benefits for such a couple will be needed to cover healthcare expenses; for younger couples, that share rises to between 104% and 129% of their expected Social Security benefits.
What Employers Can Do
Karen Volo, Fidelity’s head of health and benefit accounts, says one of the biggest ways an employer can help employees—future retirees—prepare for big expenses in retirement is to make them aware of the numbers they are projected to spend.
“Education and awareness is probably the best thing that an employer can offer,” Volo says. “Make sure that your employees understand that healthcare must be a part of [their] financial planning—and it certainly should be a part of [their] retirement planning.”
According to Fidelity’s research, 54% of pre-retirees incorrectly believe Medicare will cover all of their healthcare expenses in retirement.
Aside from illuminating employees’ projected healthcare costs, Volo says employers who offer high-deductible health plans with health savings accounts can help their employees understand the “triple-tax-advantaged” benefits of HSAs. Contributions can be made pre-tax; withdrawals for qualified medical expenses can be made tax-free; and any potential investment growth is tax-free as well.
HSA balances accumulate over time if they are not spent, giving savers the ability to use HSA funds for qualified medical expenses today or save them for healthcare costs in retirement, according to Fidelity’s report on the retiree cost estimate. Yet only 35% of HSA holder respondents to the 2025 EBRI/Greenwald Research Consumer Engagement in Health Care Survey reported saving in their HSA for health care costs in retirement, and just 28% had invested their account funds.
Making sure employers educate the “saver,” the “spender” and the “investor” can help employees optimize HSAs—what Volo calls the “best tool available” to save for healthcare expenses.
