Retirees May Need $185,500 to Cover This Major Cost, According to a 2026 Estimate

Money from work may stop in retirement, but expenses usually do not. Retirees still have to pay for essentials such as transportation, food, and housing, and healthcare can become one of the largest costs of all. Fidelity estimates that a 65-year-old retiring in 2026 could need $185,500 in after-tax savings to cover healthcare costs over retirement, assuming traditional Medicare coverage. That estimate does not include long-term care, most dental services, or over-the-counter medicines.

At the same time, a report from the Transamerica Center for Retirement Studies found that retired households had median savings of $126,000, excluding home equity, in late 2024. It also said 12% of retirees surveyed had no savings at all. The figures highlight the strain many American retirees may face, especially because those savings may also need to help cover food, housing, and other daily costs alongside Social Security or pension income.

Healthcare costs also appear to be rising steadily. Fidelity’s 2026 estimate is $13,000, or about 7.5%, higher than its $172,500 estimate for 2025 and roughly 12.4% above the $165,000 projection it made for 2024. That suggests people still preparing for retirement may want to leave extra room for future medical costs, helping avoid one of the more common retirement regrets. Fidelity says the increase is mainly tied to higher healthcare prices, greater use of medical services, and rising costs connected with chronic condition management.

The expenses behind Fidelity's healthcare estimate

Fidelity’s estimate assumes the retiree has Original Medicare Parts A and B, plus Part D prescription drug coverage. Premiums for Parts B and D make up 45% of the projected lifetime healthcare cost, or about $83,500. Those payments are only for maintaining coverage and are separate from what retirees may still owe when they actually receive care.

The largest portion, 48%, is assigned to other medical expenses, or about $89,000 over retirement. This includes deductibles, copayments, and coinsurance tied to hospital stays, outpatient care, and other services. Fidelity also places some costs Medicare does not cover, such as routine vision and hearing exams, in this category.

The final 7%, or roughly $13,000 over retirement, is earmarked for out-of-pocket prescription drug costs. This generally covers copayments and expenses Part D does not pay for brand-name, generic, and specialty drugs. Spread across a hypothetical 20-year retirement, that works out to about $650 a year, or around $54 a month. Even so, Medicare’s out-of-pocket cap for covered Part D drugs was $2,100 in 2026 and is set to rise nearly 14% to $2,400 in 2027. One year at the cap would therefore equal roughly three to four years of the example $650 average. Actual drug costs can vary widely depending on medications, coverage, and health needs.