Retirement health costs rise to $185,500 for 2026 retirees: Fidelity

Key Points:

• Fidelity Investments estimates that a 65-year-old retiring in 2026 may spend an average of $185,500 on health and medical expenses during retirement, a 7.5% increase from last year's retirees due to rising healthcare costs and greater use of medical services.
• The estimate assumes enrollment in traditional Medicare Parts A, B, and D, with costs split among Medicare cost-sharing, premiums, and out-of-pocket drug expenses; however, 54% of pre-retirees mistakenly believe Medicare will cover all their health expenses.
• Long-term care costs are not included in the estimate, despite nearly 70% of 65-year-olds likely needing such services, which are rising faster than inflation and often exceed typical retirement incomes.
• Prescription drug costs have slightly decreased due to new Medicare price negotiations, but overall healthcare expenses continue to rise because of increased chronic conditions and more frequent medical service usage.
• Experts advise early retirement savings with consideration for healthcare costs, including using health savings accounts (HSAs) for their tax advantages, while also recommending careful evaluation of medical tests and prescriptions to avoid unnecessary expenses.