How Much Will Healthcare Cost in Your Retirement?

Ask most pre-retirees how much they think healthcare will cost in retirement, and you will get a range of answers — often vague ones. 'A few hundred a month,' some will say. Others will offer no guess at all, acknowledging that they simply do not know. That uncertainty is understandable, because healthcare costs are genuinely complex. What is less understandable — and more problematic — is how often people arrive at retirement without having made any serious attempt to estimate this number. Healthcare is routinely one of the largest unbudgeted expenses retirees face, and it is entirely predictable.

The Fidelity Benchmark Fidelity Investments publishes an annual estimate of expected healthcare costs for a 65-year-old couple retiring in the current year. For 2025, that number is $315,000. That is the median estimate for a couple with average life expectancy, average health status, and no long-term care event. It includes Medicare premiums, deductibles, copays, and out-of-pocket costs. It does not include premiums for supplemental insurance if you choose to purchase it. It does not include long-term care. It does not include dental, vision, or hearing aids. It is healthcare costs, but it is not the ceiling.

To put $315,000 in perspective: that is roughly $15,000 to $16,000 per year for a couple. For an individual, Fidelity estimates around $185,000 over the same timeframe — again, roughly $9,000 to $10,000 per year. For many households, these numbers are significant relative to their retirement income. They are not enormous amounts, but they are material, and they need to be accounted for.

Medicare Covers What? To understand your costs, it helps to start with what Medicare actually covers. Medicare has two major components: Hospital Insurance (Part A) and Medical Insurance (Part B). Part A covers inpatient hospital care, skilled nursing, and some home healthcare. Part B covers physician services, outpatient care, and certain medical equipment. Both carry deductibles, copayments, and coinsurance obligations. Part A has no premium for most people (because they paid into Medicare their entire working life), but Part B does. For 2025, the standard Part B premium for most beneficiaries is $185 per month — though it is higher for those with higher incomes.

But Medicare alone is not health insurance in the way most people think of it. There are coverage gaps. Hospital stays longer than 60 days are not fully covered. Certain outpatient services require prior authorization. Prescription drugs are covered under a separate program (Part D), with its own premiums, deductibles, and cost-sharing. Many retirees find that original Medicare leaves them exposed to catastrophic costs, which is why supplemental coverage is so common.

Supplemental Insurance (Medigap) A Medigap policy is private insurance purchased from a insurance company to cover gaps in original Medicare. There are ten standardized Medigap plans (A through N), each with different combinations of coverage and cost. A more comprehensive plan (like Plan G or Plan N) might cover the Medicare Part B deductible, excess charges, and other out-of-pocket costs. These plans have their own premiums, which vary by insurance company and increase with age. For a Florida resident, premiums for a Plan G might run $150 to $250 per month in your late 60s, increasing significantly as you move into your 80s.

The trade-off is straightforward: higher premiums now, lower out-of-pocket costs when you use healthcare. For many retirees, this trade-off makes sense. For others, a lower-premium plan with higher cost-sharing is preferable if their health is excellent and they expect minimal healthcare use.

Prescription Drug Costs Prescription drug costs are a substantial piece of the healthcare puzzle. Part D covers prescription drugs through private insurance plans you choose, and there is a wide range in how different drugs are covered and what your costs will be. For someone taking multiple maintenance medications — blood pressure medication, cholesterol medication, diabetes medication — annual drug costs can easily run into the thousands. A monthly blood pressure medication might cost $50 to $100 per month. A cancer medication can cost thousands per month. Most people see drug costs increase rather than decrease in retirement.

Dental, Vision, and Hearing Original Medicare does not cover dental care (cleanings, fillings, extractions), vision care (routine eye exams, glasses), or hearing aids. These are often called the 'missing three' from Medicare. For many retirees, these add up: dental work can be expensive, new glasses are rarely cheap, and hearing aids cost anywhere from $2,000 to $6,000 per ear. Some people purchase standalone dental and vision insurance; others budget for these out-of-pocket. Either way, they are real costs that many people have not budgeted for.

Long-Term Care This deserves its own mention because it is the biggest variable in healthcare costs. Fidelity's $315,000 estimate assumes no long-term care event — no extended nursing home stay, no in-home care. But roughly 40% of people over age 65 will spend some time in a nursing facility or require significant in-home care. A year in a nursing home in the Tampa Bay area can easily cost $75,000 to $150,000 depending on the facility and the level of care. A decade of in-home care assistance might cost $200,000 to $500,000. Long-term care insurance exists to mitigate this risk, but it carries its own premiums and has its own underwriting rules. For many families, this is the single biggest healthcare-related financial risk in retirement.

What You Should Do Start by estimating your own expected healthcare costs. Work through the numbers with your advisor: What will your Medicare premiums be? Are you planning to purchase supplemental insurance? What do you expect your prescription drug costs to be? Do you need dental or vision coverage? Is long-term care insurance part of your planning? These are not questions with one correct answer — they are highly personal decisions based on your health status, family history, risk tolerance, and financial situation. But they need to be asked and answered as part of your retirement plan, not left as an afterthought. For Tampa Bay families with $500,000 or more in retirement savings, healthcare costs should be explicitly modeled, budgeted for, and factored into your withdrawal strategy and tax planning.