How Much Will Healthcare Cost Me in Retirement?
Last reviewed: July 2026
Healthcare costs in retirement run higher than most people budget for. A 65-year-old retiring today should plan for roughly $165,000 in out-of-pocket medical expenses over the rest of their life, according to Fidelity's Retiree Health Care Cost Estimate. That number covers Medicare premiums, deductibles, copays, and prescriptions, but it leaves out long-term care entirely. For a couple, the total roughly doubles. The good news: most of this is plannable if you understand the moving parts before you enroll.
Key Takeaways
- A single 65-year-old retiree should budget around $165,000 for lifetime out-of-pocket healthcare, not counting long-term care.
- The standard 2026 Medicare Part B premium is $202.90 per month, and higher earners pay IRMAA surcharges on top.
- Original Medicare covers only about 80% of Part B costs, which is why most retirees add a Medigap or Advantage plan.
- Medicare does not cover long-term care, the single largest healthcare risk most retirees face.
About the Author: Jeff Judge, CFP®, AEP®, ChFC®, CLU® is Managing Partner of Chesapeake Financial Planners in Forest Hill, Maryland. He has been helping families and business owners in Harford County and the Baltimore metro area navigate retirement healthcare decisions since earning his CFP® certification in 2013, by using Chesapeake Financial Planners’ signature process, the R.U.D.D.E.R. method™. Jeff sees the same pattern every year: clients plan their income down to the dollar and then get blindsided by Medicare premiums and IRMAA surcharges they never saw coming.
How Much Should You Expect to Spend on Healthcare in Retirement?
Plan for $165,000 in lifetime out-of-pocket costs as a single retiree, or roughly $330,000 as a couple, based on Fidelity's 2024 estimate. That figure covers premiums, deductibles, copays, and drugs. It does not include long-term care, dental, or hearing aids, which can add tens or hundreds of thousands more.
Your actual number depends on a handful of things you can partly control:
- Your health status and family medical history
- Where you live, since costs and plan pricing vary by region
- The Medicare coverage path you choose
- Whether you eventually need long-term care
Here is what most people get wrong. They treat healthcare as a small line item and then watch it become one of their three largest retirement expenses. Jeff Judge tells clients to model healthcare as its own category in the plan, the same way you'd model housing or taxes. Treating it as an afterthought is how a solid retirement budget springs a leak. For a deeper look at framing this expense, see our guide on How do I plan for rising healthcare costs in retirement?.
What Are the Four Parts of Medicare, and What Do They Cost in 2026?
Medicare is the federal health program for people 65 and older, and it comes in four parts that work together. Understanding each one tells you where your money goes.
Part A (Hospital Insurance) covers inpatient stays, skilled nursing, hospice, and some home health care. Most people pay no premium because they paid Medicare taxes while working. The 2026 inpatient hospital deductible is $1,736 per benefit period.
Part B (Medical Insurance) covers doctor visits, outpatient care, and preventive services. The standard 2026 premium is $202.90 per month, with an annual deductible of $283. Higher earners pay more through IRMAA.
Part C (Medicare Advantage) is a private-insurer alternative to Original Medicare. These plans often bundle drug coverage and extras like dental or vision, but they use provider networks and prior authorization.
Part D (Prescription Drug Coverage) covers medications. Under Original Medicare you buy a standalone Part D plan, and starting in 2025 a $2,000 annual out-of-pocket cap on covered drugs took effect and continues in 2026. That cap is one of the most meaningful changes for retirees with high drug costs in years.
For a full walkthrough of how the parts interact, see our What Are the Different Parts of Medicare and What Do They Cover?.
What Does Medicare Not Cover?
Medicare leaves several large gaps that retirees pay for out of pocket. Knowing these gaps up front is how you avoid a budget surprise.
- Routine dental, vision, and hearing care, including hearing aids
- Long-term care in a nursing home or assisted living
- Custodial care at home, meaning help with bathing, dressing, and eating
- Day-to-day deductibles, copays, and the 20% coinsurance Part B leaves you
That last point catches people. Original Medicare covers roughly 80% of Part B services and leaves the other 20% with no annual cap. On a major medical year, 20% of an unlimited number is a frightening figure. That is exactly why supplemental coverage exists, and why almost no one runs Original Medicare alone.
Medigap vs. Medicare Advantage: Which Should You Choose?
The biggest Medicare decision is whether to pair Original Medicare with a Medigap policy or switch to a Medicare Advantage plan. There is no universally correct answer, but the tradeoffs are clear. Here is a side-by-side comparison.
| Feature | Medigap (with Original Medicare) | Medicare Advantage (Part C) |
|---|---|---|
| Provider access | Any doctor who accepts Medicare, nationwide | In-network providers only |
| Monthly premium | Higher, on top of Part B | Often low or $0 |
| Prescription drugs | Separate Part D plan required | Usually included |
| Extra benefits | None | Often dental, vision, gym |
| Prior authorization | Rare | Common for many services |
| Predictability | High, fewer surprise costs | Lower, copays add up |
Jeff Judge frames this decision around a single question with clients: do you value predictability or low monthly cost more? Medigap costs more each month but rarely surprises you, and you keep nationwide access. Advantage saves on premiums but trades that for networks, prior authorization, and variable copays. People who travel, split time between two states, or want to keep a specific specialist usually lean Medigap. For a detailed breakdown, read our What Are the Different Medicare Supplement Plans and Which Is Best?.
How Do IRMAA Surcharges Raise Your Medicare Costs?
If your income crosses certain thresholds, you pay more for Part B and Part D through the Income-Related Monthly Adjustment Amount, or IRMAA. The surcharge is based on your Modified Adjusted Gross Income from two years prior, so your 2026 premiums reflect your 2024 tax return.
This two-year lookback is where retirees get tripped up. A one-time income spike, such as a large Roth conversion, a capital gain on a home sale, or an inherited IRA distribution, can push you into a higher IRMAA bracket and raise your premiums for a full year. The 2026 surcharges range from modest to several hundred dollars per month per person at the top brackets, per Medicare.gov.
The planning lever here is income timing in the years before and during early retirement. This is where the R.U.D.D.E.R. Method™ earns its keep. The R.U.D.D.E.R. Method™ is Chesapeake Financial Planners' six-step planning process: Review and Recognize, Uncover and Understand, Design and Develop, Discuss and Decide, Execute and Empower, and Reassess and Refine. Reviewing your projected income two years out is exactly the kind of forward look that keeps a Roth conversion from quietly inflating your Medicare bill. For more, see our post on How do Roth conversions affect IRMAA and Medicare Part B premiums?.
Frequently Asked Questions
How much does a couple need for healthcare in retirement?
A 65-year-old couple retiring today should plan for roughly $330,000 in lifetime out-of-pocket healthcare costs, based on Fidelity's per-person estimate of about $165,000. That figure covers Medicare premiums, deductibles, copays, and prescriptions. It does not include long-term care, dental, or hearing aids, which can add substantially more depending on your health and longevity.
Is Medicare free once I turn 65?
No, Medicare is not free. Part A is usually premium-free if you paid Medicare taxes while working, but Part B carries a standard 2026 premium of $202.90 per month, and Part D and supplemental plans cost extra. You also face deductibles, copays, and coinsurance. Most retirees spend several thousand dollars a year on premiums and out-of-pocket costs combined.
Does Medicare cover long-term care?
No, Medicare does not cover long-term custodial care, which is the help most people eventually need with daily activities like bathing, dressing, and eating. Medicare covers only short-term skilled nursing after a qualifying hospital stay. Long-term care is paid out of pocket, through Medicaid once assets are depleted, or with long-term care insurance, making it the largest uncovered healthcare risk in retirement.
What is IRMAA and how do I avoid it?
IRMAA is the Income-Related Monthly Adjustment Amount, a surcharge added to your Medicare Part B and Part D premiums when your income exceeds set thresholds. It uses your income from two years prior. You can reduce or avoid it by managing income timing, spreading out Roth conversions, and planning large capital gains carefully in the years that affect your premiums.
Do I still need Part D if I rarely take medications?
Yes, you generally still want Part D even if you take few drugs, because skipping it triggers a permanent late-enrollment penalty if you sign up later. A low-premium plan protects you against future prescription costs and the penalty. Starting in 2025, Part D also caps your annual out-of-pocket drug spending at $2,000, which adds real protection if your medication needs change.
If you found this helpful, our retirement healthcare planning guide walks through how to build these costs into your full income plan, including Medicare timing, IRMAA, and long-term care. Download it at chesapeakefp.com to make sure your healthcare costs in retirement are planned for, not left to chance.
Disclosures
The information provided is for educational purposes only and should not be construed as investment advice. Investment strategies should be tailored to individual circumstances, risk tolerance, and goals. Past performance doesn't guarantee future results. Consult with qualified financial professionals regarding your specific situation.
Advisors associated with Chesapeake Financial Planners may be either (1) LPL Financial Registered Representatives offering securities through LPL Financial, Member FINRA and SIPC, and investment advisor representatives offering investment advice through Great Valley Advisor Group; or (2) solely investment advisor representatives offering investment advice through Great Valley Advisor Group and not affiliated with LPL Financial. Great Valley Advisor Group, and Chesapeake Financial Planners are separate entities from LPL Financial.
