When I retired, one of the first surprise line items in my budget turned out not to be golf or travel, it was exactly how much I might spend on medical care before I die. If you’re like me, you want more certainty (or at least a smart guess) about what health care will cost over your golden years. Spoiler: it’s a lot more than most of us imagine, even with Medicare.

How Much Does the Average Retiree Spend on Health Care?

According to Fidelity’s most recent estimates, a 65-year-old retiring now can reasonably expect to spend about $172,500 on health care and medical expenses over the rest of their retirement. (Fox Business) That’s not small change, and it assumes you’re enrolled in traditional Medicare (Parts A and B) plus Part D for prescriptions. (InvestmentNews)

To put that in context: Fidelity’s 2024 estimate was $165,000, so the cost is creeping up. (Fidelity Newsroom) That’s more than double the amount they projected back in 2002, when their figure was around $80,000. (InvestmentNews)

But wait, that’s an average. Your mileage may vary, based on your health, how long you live, what kind of Medicare coverage or supplemental plan you pick, and how much you “use” the health-care system.

Indeed, according to a study by Milliman (as reported by Annuity.org), a healthy 65-year-old woman could face lifetime medical costs of around $320,000, while a man the same age might spend about $281,000 — assuming Original Medicare plus a Medigap plan and Part D drug coverage. (Annuity.org) That’s nearly double Fidelity’s number (because, among other things, they’re factoring in more usage or “typical” health care demand over time).

If instead you choose a Medicare Advantage plan rather than Medigap, that lifetime cost estimate drops significantly: Milliman projects about $147,000 for a woman or $128,000 for a man, under certain plan assumptions. (Annuity.org)

So depending on your choices, and your longevity, that $172,500 could be a bit optimistic, or even conservative.

What Does That Cost Breakdown Look Like?

Where does that money go? It’s not just hospital bills; the cost estimate includes monthly premiums, co-pays, deductibles, and prescription drugs.

For instance, in Fidelity’s model, they assume you’re paying Medicare Part B (which covers doctor visits and outpatient care) and Part D (drugs), plus your share of co-insurance, co-pays, and other out-of-pocket costs. (InvestmentNews) Over decades, those costs stack up.

Some research, like that from the Center for Retirement Research at Boston College, suggests that retirees themselves (i.e., out-of-pocket) pay about 22% of their total lifetime health care costs, excluding insurance premiums. (Center for Retirement Research) In dollar terms, for a typical household, that works out to about $67,300 in out-of-pocket expenditures. (Center for Retirement Research)

Other studies (such as T. Rowe Price’s) emphasize that health care spending is skewed: a small percentage of retirees will have very high costs, especially later in life. (T. Rowe Price) In fact, among very old retirees, some could face “health-care shocks” — years in which their out-of-pocket costs spike dramatically.

What Isn’t Included (and Why It Matters)

Importantly, none of these big numbers typically include long-term care — that’s nursing homes, assisted living, or extensive in-home care. Fidelity’s $172,500, for example, covers “medical expenses,” but long-term care is a separate, and often much bigger, risk. (Encyclopedia Britannica)

And long-term care is wildly expensive: assisted living can cost more than $70,000 per year, and a private room in a skilled nursing facility can exceed $110,000 annually, according to estimates. (Encyclopedia Britannica) If you need that kind of help in your later years, your savings could take a serious hit, or require a backup plan, like insurance or family support.

Why This Is So Tricky (and Why It Scares a Lot of Retirees)

Health care costs in retirement are one of the most unpredictable lines in your budget. Their wildness comes from multiple forces:

First, medical inflation has consistently outpaced general inflation. (Encyclopedia Britannica) When your medical costs go up faster than everything else, even a “reasonable” projection can fall short.

Second, Medicare isn’t a magic bullet. Even with Parts A, B, and D, there are gaps: deductibles, co-insurance, and services not fully covered (vision, dental, hearing) can add up. (Encyclopedia Britannica) You might also choose a supplemental plan (Medigap) or a Medicare Advantage plan; each has different trade-offs.

Third, longevity risk is real. The longer you live, the more medical care you’ll need. And if you live into your 90s, you could face years of rising health-care use, especially for chronic conditions. As one planning report from the Kendal Corporation points out, out-of-pocket costs may nearly double every five years as you age. (The Kendal Corporation)

Finally, as I mentioned, long-term care is a wildcard. Medicare covers very little of long-term custodial care (help with bathing, dressing, etc.), so if you or your spouse need that, it could be the biggest financial burden of all.

So … How Much Should You Plan to Spend?

Given all that variability, you probably want a planning range, not a fixed number. Based on the data:

• A “base case” (average to above-average health, traditional Medicare) might land you around $165,000–$175,000 in lifetime medical costs, per Fidelity. (Fidelity Newsroom)
• If you’re particularly healthy and live a long life, that number could rise to $280,000–$320,000, per Milliman’s estimates. (Annuity.org)
• If you choose a Medicare Advantage plan (and it suits your health-care usage), maybe you come in on the lower end: Milliman estimates ~$128,000–$147,000, depending on gender. (Annuity.org)
• And long-term care? That’s a whole different beast, don’t count on Medicare to pick up that tab unless you have very specific coverage or low assets.

What You Can Do to Be Prepared (Without Losing Sleep)

Given the risk, the upside is that you can plan for it pretty smartly, and not just by squirreling away money and hoping for the best.

One of the most powerful tools in your retirement-planning arsenal is a Health Savings Account (HSA). If you have one before you retire, the money rolls over, grows tax-free, and can be used tax-free for qualified medical expenses later on. (Encyclopedia Britannica) That gives you a dedicated bucket for likely future health costs.

Review your Medicare coverage carefully. Every year during Medicare’s open enrollment window, you can revisit your plan choices. That’s when you can decide whether to stick with traditional Medicare with a Medigap plan, or switch to Medicare Advantage — depending on cost, coverage, and how much you expect to use care.

Also, run stress-test scenarios: In your retirement budget, assume a lower-cost case and a higher-cost case. Play both out over a 20- to 30-year retirement and ask: “If I live longer than 85, what happens to my savings? If I need even part-time in-home care, can I afford it?”

If you’re worried about long-term care, explore options like long-term care insurance (if you qualify), or hybrid policies that combine life insurance with LTC benefits. Even putting away a portion of your retirement savings (or having a fallback plan with family) for that risk can make a big difference.

Finally, keep your health in as good shape as possible: eating well, staying active, managing stress. It may sound cliché, but better health really does reduce health-care usage. If you’re healthier in retirement, you’re less likely to blow past the average estimates.

A Few Practical Examples (From My Retirement “Lab”)

In my own retirement planning, I took Fidelity’s $172,500 estimate as a baseline. Then I ran a “what-if” scenario: what if I live to 90 and have moderate chronic conditions? That pushed my health-care cost estimate to over $240,000. That was a wake-up call, but not a panic attack, because I also modeled having an HSA and an emergency health-care reserve.

I also priced out Medigap vs. Medicare Advantage in my zip code. I found that the Medigap plan gave me more predictable costs but came with a higher monthly premium; the Advantage plan was cheaper monthly, but the out-of-pocket risk was higher. I ended up splitting the difference in my budget: I’m assuming I’ll pay more out-of-pocket in some years, but I’m banking on staying healthy.

I also made a “longevity buffer” in my retirement savings, not for the stock market risk, but specifically for health risk. Because the last thing I’d want is to run out of money because I lived too long or needed too much care. (Yes, I said it out loud. You should too.)

Final Thoughts (Because Every Retiree Needs Some Reassurance)

Here’s what I want you to take away from all this: health care is going to be one of your largest expenses in retirement, but it’s not something you have zero control over. With realistic planning, you can build a cushion, make smart choices, and reduce the chance of a nasty surprise.

Yes, $172,500 (or more) is a hefty number. But if you don’t plan for it, that number isn’t going anywhere. Ignoring health-care costs is like choosing to drive without insurance — maybe nothing happens, but if it does, it’s going to hurt.

You don’t need to predict exactly what will happen (spoiler: none of us do), but you do need to acknowledge the risk, make a plan, and give yourself enough runway so that your retirement years are about enjoying life — not worrying about medical bills.

Don’t wait until it’s too late, get your financial house in order today!

Happy retirement planning!