A Key Retirement Cost: Fidelity’s 2025 Healthcare Estimate

Fidelity’s 2025 Retiree Health Care Cost Estimate adds practical context to a retirement concern that often feels abstract: how much healthcare may cost over time. The estimate suggests that a 65-year-old retiring in 2025 can expect to spend an average of $172,500 on healthcare and medical expenses throughout retirement, continuing a long-running upward trend in projected health-related costs.

The Estimate Underscores How Meaningful Healthcare Costs Can Be

Fidelity’s estimate is designed to help households understand how healthcare expenses may affect long-term retirement readiness. The projected total is not intended to cover every possible medical scenario, but it does provide a grounded reference point for how cumulative costs can build across retirement.

The estimate assumes enrollment in Original Medicare (Parts A and B) and Medicare Part D, and includes premiums, co-payments, and other out-of-pocket costs for medical care and prescription drugs. Importantly, it does not include long-term care expenses.

A Planning Gap Persists Across Generations

The release also points to an ongoing challenge: many Americans have not fully incorporated healthcare into retirement planning. Fidelity cites research suggesting that a meaningful portion of people have never considered health care needs in retirement, and that some have taken no action at all to plan for those expenses.

That gap matters because healthcare expenses often arrive as ongoing, recurring costs rather than one-time events, and they can compete directly with other income needs such as housing, food, travel, and lifestyle spending.

Health Savings Accounts Are Highlighted as a Key Tool

Fidelity emphasizes Health Savings Accounts (HSAs) as a potential planning lever for those who are eligible. HSAs are described as having a triple tax advantage: contributions may be pre-tax, qualified withdrawals can be tax-free, and investment growth can also be tax-free when used for qualified medical expenses.

At the same time, the release highlights that many people may not be using HSAs to their full potential. Fidelity notes that while HSA adoption has increased, fewer Americans report using an HSA specifically as part of preparing for healthcare costs in retirement, and a smaller subset invest HSA balances—leaving long-term growth potential underutilized.

Medicare Helps, but It Doesn’t Cover Everything

For those approaching Medicare eligibility, the release reinforces a practical reality: Medicare can play an important role, but it is not a comprehensive solution for all retirement healthcare spending. Premiums and out-of-pocket costs can accumulate, and retirees may still face expenses such as over-the-counter medications, dental and vision care, and other uncovered items. Long-term care remains a separate planning category altogether.

Why This Matters for Retirement Readiness

Fidelity’s 2025 estimate reinforces that retirement planning is not only about investment balances—it’s also about understanding and coordinating the expenses that can shape income sustainability over decades. Healthcare is often one of the most persistent and least predictable variables, which is why incorporating realistic cost expectations can materially strengthen long-term planning clarity.

Source: Fidelity Investments. Original press release published July 30, 2025.
Read the original press release.