Retirement Brings a $185,500 Health Care Estimate

Health insurance looks different once the paycheck stops. For many people, coverage tied to an employer gives way to Medicare at 65, and with it comes a new set of premiums, deductibles, and services that are not covered. Fidelity’s 25th annual retiree health care cost estimate puts a number on that shift: a 65-year-old retiring in 2026 can expect to spend about $185,500 on health care and medical expenses over the course of retirement, net of taxes. That is up 7.5% from the year before.

What the Estimate Covers

The figure is built on a specific profile: a single person retiring at 65 in 2026, enrolled in Original Medicare (Parts A and B) plus Part D prescription coverage, with no employer-provided retiree health coverage. Life expectancy comes from Society of Actuaries mortality tables, so the total reflects the rest of a lifetime, not a single year.

Some costs are left out on purpose. Long-term care, most dental care, and over-the-counter medications are not included, which means the real health budget for many people will be larger than the headline. Fidelity has produced the estimate every year since 2002, and this is the 25th edition. That history makes it a useful yardstick, but it is still an average. Actual costs depend on health, location, and longevity, and a couple would plan for two people rather than one.

Where the Money Goes

Health care in retirement is often pictured as a monthly premium. The breakdown shows that premiums are only part of the picture.

Cost Category	Share of Estimate	What It Includes
Medicare Parts B and D premiums	45%	Recurring monthly premiums
Other medical expenses	48%	Copayments, coinsurance, deductibles, and services such as vision and hearing exams
Prescription drugs	7%	Out-of-pocket drug costs

The premium side is the predictable part. The Centers for Medicare & Medicaid Services set the 2026 standard Part B premium at $202.90 a month, up $17.90 from 2025, which works out to roughly $2,435 over a year. Part B also carries a $283 annual deductible. Both numbers are published well in advance.

The other 55% is harder to pin down. Cost-sharing, uncovered services, and prescriptions arrive unevenly, depending on health and how often care is needed.

What Original Medicare Leaves to You

Original Medicare covers a great deal, but it is built with cost-sharing. A covered hospital stay carries a $1,736 Part A deductible per benefit period in 2026, and longer stays add daily coinsurance: $434 a day for days 61 to 90, and $217 a day in a skilled nursing facility from day 21 through day 100. Part A carries no premium for most people, but for those who must pay it, the full 2026 premium is $565 a month.

Then there are services outside the program’s scope. Fidelity points to vision and hearing exams, and the estimate excludes most dental care and long-term care altogether. Part D helps with prescriptions, yet drug costs still land in the estimate as an out-of-pocket line, about 7% of the total.

Timing Matters at the Start

The estimate begins at 65 because that is when most people become eligible for Medicare. AARP describes the Initial Enrollment Period as a seven-month window: it opens three months before the month of the 65th birthday and closes three months after it. Miss that window and a late enrollment penalty may apply for the rest of a person’s life, which turns a timing decision into a permanent cost.

The fine print matters when work or other coverage continues past 65. According to AARP, certain coverage, including COBRA and retiree plans, does not qualify for a special enrollment period and does not prevent a penalty after 12 months or more without Part B. Retiring before 65 raises a separate question as well, which is how to cover the years until Medicare begins. The estimate itself assumes no employer-provided retiree coverage, so knowing early which situation applies changes the picture considerably.

Where Expectations and Reality Part Ways

Fidelity paired the estimate with a survey of 2,015 U.S. adults, fielded in December 2025. Most expect to retire on their own terms: 72% say so, and nearly three in four say they have a retirement plan. Health care is where the confidence thins. About 81% describe retiree health costs as high, and 26% name them a top savings challenge.

The sharper finding is a misunderstanding. Some 54% of pre-retirees wrongly believe Medicare covers all of their health expenses. Fidelity’s head of health put it plainly, saying Medicare is a critical part of coverage but “does not eliminate every health care expense.” A plan is a start, and this research suggests health care deserves its own line in it.

Lining Up Income With Health Costs

Health care is one of the few expenses that arrives every month and keeps arriving. That is why turning savings into a paycheck often starts with the bills that do not move: premiums, prescriptions, and routine care. Income that arrives monthly, such as Social Security, a pension, or guaranteed lifetime income, can be matched directly against those recurring costs. A premium known in advance is the easiest line to cover with income known in advance, and that leaves less to worry about when the less predictable costs show up.

Fidelity’s estimate is a benchmark rather than a forecast, and that is its value: a number to react to early, while there is time to line up the income that will meet it.

Source: Fidelity Investments. Read the original release.

Medicare cost figures: Centers for Medicare & Medicaid Services, announced November 14, 2025, as reported by HMP Global Learning Network.

Medicare enrollment information: AARP.