What the Typical Retiree Really Pays for Health Care

Many workers focus on building up a 401(k) through their employer, but they often overlook how much retirement can cost once paychecks stop. One of the biggest surprises is health care, which many retirees underestimate.

According to recent Fidelity data, a 65-year-old retiring in 2026 is expected to spend an average of $185,500 on health care and medical expenses over the course of retirement. For people living on a fixed income, that figure can be startling. Here is a closer look at why health care can be so expensive in retirement and how to prepare financially.

Health care costs keep climbing

Fidelity estimated that the average retirement health care bill would be $172,500 in 2025. In 2002, the estimate was just $80,000. For people still in the workforce, that trend suggests the bill may continue to rise.

From 2025 to 2026, the average estimate increased by 7.5%. That means even people who are five to 10 years away from retirement could face higher-than-expected health care costs later on.

The average estimate does not cover everything

Fidelity's figure does not include long-term care. If someone needs services such as a nursing home or memory care facility, the real cost of health care in retirement could be much higher than the average estimate. Planning for that possibility is essential.

Women may face even higher costs

Women generally live longer than men, which can lead to higher total health care spending over time. Research from Milliman's 2026 Retiree Health Cost Index projects costs of about $297,000 for men and $340,000 for women under traditional Medicare.

Those estimates are for a healthy person retiring at 65. People with ongoing health issues may spend more. If you expect to need more medical care in the future, it makes sense to reserve extra savings for health care when building a retirement budget.

Why costs are rising

Several forces are pushing costs higher. One major reason is longevity: people are living longer, which means more doctor visits, more treatment, and potentially more long-term care.

Health care is also rising faster than inflation. The latest data from the Peter G. Peterson Foundation shows health care costs per capita were up 3.2% in January 2026, compared with a 2.4% personal consumption expenditure price index, a common measure of inflation for goods and services.

Another factor is rising Medicare premiums. Together, these trends are making an already costly health care system even more difficult for retirees who depend on fixed incomes.

Spending tends to rise after age 80

RAND data indicates that health care expenses generally increase after age 80, while spending on categories such as travel and leisure usually falls. That makes it important to plan for higher medical costs later in life.

In some cases, nursing homes or memory care facilities can cost thousands of dollars a month for round-the-clock assistance, quickly draining retirement savings.

Make health care part of your retirement plan

One of the best ways to prepare is to include health care as a regular line item in your retirement budget. Keeping track of spending, cutting high-interest debt, and building an emergency fund can all help you handle rising medical expenses as you age.

If retirement is still a few years away, take advantage of catch-up contributions and employer matches so you can save as much as possible before leaving work. The shift from a paycheck to a fixed income can be difficult, so advance planning matters.

Talk with a financial advisor

If you need help organizing retirement expenses, a financial advisor can be useful. They can help you evaluate account types that may support health care spending, including an HSA.

They may also guide you on the most tax-efficient way to withdraw money from retirement accounts so your savings last as long as possible.

The bottom line

It can be difficult to stay on track with retirement goals when health care costs keep rising. That is why planning ahead and seeking professional advice can make such a difference.

Because health care expenses continue to rise faster than inflation, having a strategy for paying those bills can reduce financial stress in retirement.

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