Health Care Costs in Retirement: How Much to Plan for
Key Points – Health Care Costs in Retirement: How Much to Plan for
- A 65-year-old retiring in 2026 may need about $185,500 for health care, not counting long-term care.
- Medicare covers hospital, medical, and drug costs, but not dental, vision, hearing, or long-term custodial care.
- Long-term care costs run separately, with about 70% of retirees needing some care in their lifetime.
- Paying medical costs from an HSA instead of an IRA may help with potentially avoiding taxable income and IRMAA surcharges.
- 7-Minute Read
According to Fidelity’s annual Retiree Health Cost Estimate, a 65-year-old retiring in 2026 should plan for roughly $185,500 in health care costs over the rest of retirement.1 That total marks a 7.5% increase from 2025 and doesn’t include long-term care. For an actual household, the real number can run well below or well above that mark, depending on the coverage you choose, your health, and which accounts you use to pay for it.
How Much Does Health Care Cost in Retirement?
Fidelity’s annual estimate is one of several estimates for how much health care could cost in retirement for someone who retires in 2026. The chart below contains a few more of those estimates, each of which measures health care costs in retirement for people in different situations.
The 2026 Numbers
| Estimate | Amount |
| Fidelity Retiree Health Care Cost Estimate (single person, retiring at 65)1 | $185,500 |
| EBRI savings target, 90% confidence, Medigap — man2 | $212,000 |
| EBRI savings target, 90% confidence, Medigap — woman2 | $252,000 |
| EBRI savings target, 90% confidence, Medigap — couple2 | $405,000 |
| EBRI savings target, Medicare Advantage — man / woman / couple2 | $106,000 / $125,000 / $203,000 |
| EBRI extreme-case target — couple2 | $469,000 |
| Medicare Part B premium (monthly)3 | $202.90 |
| Medicare Part B deductible (annual)3 | $283 |
| Medicare Part A inpatient deductible3 | $1,736 |
| IRMAA surcharge begins at (2026 income)3 | $109,000 single / $218,000 joint |
The gap between $185,500 and $469,000 isn’t a contradiction. Coverage and confidence are two significant variables. Fidelity’s figure assumes average spending and Original Medicare. EBRI’s numbers move with the type of coverage. Medigap plans cost more in premiums but cap your exposure, while Medicare Advantage plans cost less upfront but less predictably. ERBI’s numbers also move with how much certainty you want that your savings will last. Someone with a 50% confidence level assumes average luck, while someone with a 90% confidence level plans for the worse years.
It bears repeating that there isn’t one number that pinpoints how much you need to plan for when it comes to health care costs in retirement in 2026. The figures from Fidelity, EBRI, and CMS are intended to serve as guidelines. If you’re trying to determine how much you may possibly need to cover health care costs in retirement, start by getting your Modern Confidence Score. It’s designed to help our team understand how confident you are not only about insurance, but your investments, estate, and taxes. Once you complete your Modern Confidence Score, our team will be in touch about next steps in building you a plan that’s designed around your unique goals and circumstances.
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What a Retired Couple Pays Per Month
The annual figures from Fidelity, EBRI, and CMS are useful for savings targets, but most people think in monthly terms. Take a healthy couple, both 66, on Original Medicare with no drug claims to speak of that has a Medigap Plan G policy and a Part D drug plan. Between the two of them, Part B premiums alone run about $405.80 a month in 2026. Then, add a Plan G premium (commonly about $150 to $250 a month per person, depending on state and insurer) and a Part D premium. That couple would be looking at somewhere around $900 to $950 a month in total premiums, before any out-of-pocket care.
That number moves the moment household income crosses the first IRMAA threshold. Once combined income tops $218,000, both the Part B and Part D premiums step up, and the increase applies to each spouse separately. Consider reviewing our IRMAA guide, which includes the bracket amounts and how the surcharge is calculated, before assuming your monthly number will stay flat.
Is Medicare Enough? What It Covers and What It Leaves Out
Medicare is the foundation, not the whole plan. Part A covers hospital stays, Part B covers outpatient care and doctor visits, and Part D covers prescription drugs. From there, you choose between a Medigap policy, which fills Original Medicare’s coverage gaps for a higher premium, or a Medicare Advantage plan, which bundles coverage (often including drugs) for a lower premium but a narrower network and more variable out-of-pocket costs. What none of those options cover (dental, vision, hearing care, and long-term care) is just as important. We’ll go into further detail on long-term care momentarily.
Retiring Before 65
If you’re retiring before Medicare eligibility, you need a bridge. The main options are COBRA continuation coverage from a former employer, an ACA marketplace plan, coverage through a spouse’s employer plan, or part-time work that comes with benefits. Each has real tradeoffs in cost and coverage.
Long-Term Care Costs Are a Separate Line
Many people don’t realize that Medicare was not built to pay for long-term care. According to CareScout’s 2025 Cost of Care study, the median cost for a private room in a nursing home is about $129,575.4 Have you considered the possibility of you and/or your significant other requiring long-term care? The Administration for Community Living estimates that about 70% of people turning 65 will need some form of long-term care during their lifetime.5 It’s important to not only plan for long-term care, whether you’ll be self-funding it, purchasing long-term care insurance, or using a hybrid approach.
How Modern Wealth Plans for Health Care Costs
Here’s where a retirement plan has to do something a cost estimate can’t. A retirement plan should factor in that health care costs in the U.S. may rise faster than general expenses.6 At Modern Wealth, we typically model health care spending growing at roughly 6.5% to 7% a year compared to 2.5% for general retirement spending.
The 2.5% annual base inflation rate is in line with the 2026 JP Morgan Long-Term Capital Market Assumptions.7 The Modern Wealth Investment Committee voted and approved usage of JP Morgan’s Long-Term Capital Market Assumptions annual report as our source for our streamlined firm-wide return assumptions.
Between May 2025 and May 2026, medical inflation was actually lower (2.6%) than general inflation (4.2%), according to AARP Public Policy Institute analysis of Bureau of Labor Statistics Consumer Price Index data. However, nursing home care and adult day services inflated at 4.6%, and home care inflated at 7.9% over that same period.
We also stress-test retirement plans against a long-term care event, rather than assuming the average outcome applies to you. That means modeling what happens to your plan if a care need materializes in year five of retirement instead of never.
Which Account Pays: HSA, IRA, or Taxable?
Where the money comes from matters as much as how much it is. Dollars withdrawn from a Health Savings Account for qualified medical expenses come out tax-free, meaning no income tax on that withdrawal. Pull the same dollar amount from a traditional IRA instead, and it counts as taxable income. That can raise your adjusted gross income enough to trigger an IRMAA surcharge two years later, when Medicare looks back at your tax return.
That may support using available HSA funds for qualified medical expenses while preserving taxable or Roth accounts for other spending, depending on your tax situation, cash-flow needs, and long-term goals. The specifics depend on your tax bracket, your Medicare timeline, and your other income sources. Consider having a conversation about tax planning in retirement rather than a rule to apply blindly. At Modern Wealth, we have CPAs and other tax specialists that work alongside our advisors and other subject matter specialists in investments, insurance, and estate.
If you have questions about potential tax ramifications as you’re planning for health care costs in retirement, start by getting your Modern Confidence Score today. It’s important to have the support of a connected financial planning team that strives to help you enjoy today with confidence for tomorrow, especially as you’re planning for retirement.
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Talk With Your Family
Health care costs in retirement aren’t just a planning exercise. Talk with your significant other about what kind of care you’d want and where, and talk with adult children about what role, if any, they’re expected to play. These conversations are far easier to have before a health event forces them.
If you haven’t had this conversation yet, or you’re not sure your plan accounts for what we’ve covered here, we’re here to help. Along with referring back to this article, make sure to download our Retirement Plan Checklist. It’s designed to help you gauge your retirement readiness, as it includes age-and date-based timelines of important retirement planning considerations as well as a 30-question checklist.
Frequently Asked Questions About Health Care Costs in Retirement
Q: How much should I budget for health care in retirement?
Fidelity estimates a 65-year-old retiring in 2026 will need about $185,500 for health care over the course of retirement, not including long-term care. EBRI’s savings targets range from about $106,000 to $469,000 depending on your coverage and how much certainty you want. Your own number depends on your health, coverage choices, and income.
Q: Is Medicare enough to cover health care costs in retirement?
Medicare covers most hospital, medical, and prescription drug costs, but it doesn’t pay for dental, vision, hearing, or long-term custodial care. Many retirees pair Medicare with a Medigap or Medicare Advantage plan to fill in the gaps, and even then, premiums and out-of-pocket costs add up to a real monthly expense.
Q: How much should I plan to spend on health care at age 66?
A single 66-year-old on Original Medicare with a Medigap Plan G policy and a Part D plan often pays somewhere in the $450 to $500 range per month in premiums alone, before out-of-pocket costs. A couple at the same age often pays around $900 to $950 a month combined. Actual costs vary by state, insurer, and health.
Q: How do I pay for health care costs early in retirement, before Medicare starts?
If you retire before 65, you’ll need a bridge: COBRA continuation coverage, an ACA marketplace plan, coverage through a spouse’s employer, or part-time work with benefits.
Q: How should I save for health care costs in retirement?
A Health Savings Account is a tax-efficient way to save since qualified medical withdrawals are tax-free. Beyond an HSA, many people draw on a mix of retirement accounts. Which retirement account you use for a given expense affects your taxable income and can influence your Medicare premiums down the road.
Q: What should I budget for health insurance as a retiree?
Between Medicare Part B premiums, a Medigap or Medicare Advantage premium, and a Part D drug plan, many retirees on Original Medicare should budget several hundred dollars a month per person, plus deductibles and any out-of-pocket costs. Long-term care, if it’s needed, is a separate and much larger expense to plan for on its own.
Where Do You Stand on How Much to Plan for on Health Care Costs in Retirement?
Again, the numbers in this article from Fidelity, EBRI, and CMS are national estimates. Your own number depends on your health, your coverage choices, your income, and how you plan to pay for care if you need it.
Health care costs in retirement are a big piece of the retirement planning puzzle, but it’s important to have all the pieces to help you be able to enjoy today with confidence for tomorrow. That’s our mission at Modern Wealth Management. Get you Modern Confidence Score today to help determine the next steps to build your confidence in covering health care costs in retirement within a connected financial plan.
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Resources Mentioned in This Article
[4] CareScout’s 2025 Cost of Care Survey
[5] How Much Care Will You Need? – Administration for Community Living (ACL)
[6] Health Care Costs and Affordability, KFF
[7] https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/insights/ltcma-2026-us-matrix_usd.pdf
Investment advisory services offered through Modern Wealth Management, LLC, a registered investment adviser.
The views expressed represent the opinion of Modern Wealth Management, LLC, a registered investment adviser. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Modern Wealth Management does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.
Health Savings Accounts (HSAs) are subject to eligibility requirements, annual contribution limits, and tax rules. Withdrawals used for qualified medical expenses are generally free from federal income tax. Withdrawals for other purposes are generally subject to income tax and, before age 65, an additional 20% tax unless an exception applies. State tax treatment may differ. Retain records supporting qualified medical expenses and consult your tax advisor regarding your individual circumstances. Whether to use HSA funds now or preserve them for future expenses depends on your financial needs and goals.