Fidelity: 65-Year-Old Retiring in 2026 Will Need $185,500 for Healthcare Alone

Fidelity Investments says a 65-year-old retiring in 2026 should expect to spend an average of $185,500 on healthcare and medical expenses for the rest of retirement. That's up 7.5% from last year's estimate, according to Fidelity's research.

Helen Lloyd-Williams, vice president of workplace consulting at Fidelity, called the jump bigger than usual. "It definitely is a higher increase than we've had in the past few years," she said.

The estimate assumes a retiree has traditional Medicare: Part A for hospital coverage, Part B for medical coverage, and Part D for prescription drugs. It breaks down like this: 48% of costs come from Medicare cost-sharing (co-pays, coinsurance, deductibles), 45% comes from monthly premiums for Parts B and D, and 7% comes from drug costs Part D doesn't cover.

Medicare Isn't Free. Most People Don't Know That.

Fidelity's research found 54% of pre-retirees wrongly believe Medicare will cover all their health expenses. It won't. Premiums alone eat up nearly half the projected bill.

"This is education for people who may not have thought about how they might need to pay for healthcare in retirement, that their Medicare isn't automatically going to cover everything, and that Medicare isn't entirely free," Lloyd-Williams said.

That's a real gap in financial literacy, and it's not a partisan problem. Nobody on either side of the aisle benefits from retirees discovering this the hard way, mid-chemo, staring at a bill.

The $185,500 Number Doesn't Even Cover the Scary Part

Fidelity's estimate does not include long-term care. A 65-year-old has close to a 70% chance of needing some form of long-term care, according to 2020 data from the Department of Health and Human Services.

And long-term care isn't cheap. Genworth and its CareScout subsidiary found that in 2024, median annual costs ranged from $26,000 for five-days-a-week adult day care up to nearly $128,000 for a private nursing home room. Costs are climbing faster than inflation and faster than seniors' incomes, according to the AARP Public Policy Institute.

Compare that to what retirees actually bring in. The median household income for someone 65 or older is about $60,000 a year, according to AARP, counting Social Security and everything else. A single year in a nursing home could cost more than double that household's entire annual income.

Why Costs Keep Climbing

Fidelity's research points to a few drivers: rising healthcare costs broadly, growing costs tied to chronic conditions, and retirees simply using more medical services than before.

There's one bright spot buried in the data. Lloyd-Williams said prescription drug costs have actually eased slightly following the rollout of new Medicare price negotiations. But that savings is getting swallowed by increases elsewhere, particularly higher utilization of services.

The timing matters. The country is in the middle of what's being called "peak 65" — a record wave of baby boomers hitting traditional retirement age. Millions of people are making these financial calculations right now, often for the first time, often without realizing what they don't know.

Looking Ahead

The Fidelity estimate is an average, not a guarantee, and individual costs will swing based on health status, location, and whether someone needs long-term care at all. But the direction is clear. This number has risen every year recently, and 2026's jump is sharper than prior years according to Fidelity's own comparison.

The open question is whether Medicare price negotiations — the one policy lever shown here to actually reduce a cost category — will expand enough to offset the broader rise in utilization and chronic-disease spending. Fidelity's data suggests that so far, it hasn't kept pace. Retirees planning for 2026 and beyond are being handed a bigger bill with fewer tools to shrink it, and long-term care remains the massive, unbudgeted risk sitting just outside this number entirely.