Fidelity's annual study consistently shocks retirees. Healthcare is typically the second-largest retirement expense after housing — and the hardest to predict.
Every year, Fidelity publishes its estimate of how much a 65-year-old couple retiring today will spend on healthcare throughout their retirement. The 2025 number: $345,000. Per person that's $172,500 — a figure that often exceeds what people have saved in total. And it doesn't include long-term care costs.
Medicare is often misunderstood as comprehensive coverage, but it has significant gaps. Original Medicare (Parts A and B) covers hospital stays and doctor visits, but requires substantial cost-sharing. There are no out-of-pocket maximums in original Medicare — unlike private insurance.
| Medicare Part | What It Covers | 2026 Cost | Notable Gap |
|---|---|---|---|
| Part A | Hospital inpatient | $0 premium (if 40+ quarters) | Inpatient deductible: $1,736 |
| Part B | Doctor visits, outpatient | $202.90/month | 20% of approved costs, no cap |
| Part D | Prescription drugs | Varies by plan | Drug formulary varies by plan |
| Medigap/Supp. | Fills Part A/B gaps | $150–$400+/month | Doesn't cover dental, vision |
The IRMAA Surcharge Trap
Medicare Part B premiums are income-based. If your Modified Adjusted Gross Income (from two years prior) exceeds $109,000 (single) or $218,000 (married), you pay surcharges that can push Part B from $202.90 up to $689.90/month per person. Large Roth conversions or asset sales can trigger this unexpectedly.
Kiplinger, 2026 IRMAA bracketsThe statistic that stops most retirement conversations cold: 70% of adults over 65 will need some form of long-term care. The average duration is 2.5 years for men and 3.7 years for women. And Medicare covers almost none of it after the first 100 days.
Health Savings Accounts (HSAs) are the only triple tax-advantaged account in the U.S. tax code: contributions are tax-deductible, growth is tax-free, and withdrawals are tax-free when used for qualified medical expenses. After age 65, you can use HSA funds for any purpose (just pay income tax, like a Traditional IRA) — but medical withdrawals remain permanently tax-free.
The HSA Power Move
If you can afford to pay current medical expenses out-of-pocket, let your HSA grow invested in stock funds. Save all your medical receipts — there's no time limit on reimbursement. Years later, reimburse yourself tax-free for accumulated expenses, or use the funds for Medicare premiums in retirement.
Apply the strategies in this article to your specific situation. FuturePath models your portfolio with 1,000 Monte Carlo simulations across 50-state tax rules.