5 Healthcare Costs ‘Smart’ Seniors Budget For
Written by
Choncé Maddox
Edited by
Levi Leidy
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Retirement planning isn’t just about replacing a paycheck. It’s also about preparing for the costs that tend to rise faster than everyday inflation. But for many seniors, the real financial pressure doesn’t come from groceries, gas or even housing. It comes from healthcare which is a category that tends to grow quietly, steadily and often faster than almost anything else in a household budget.
Even with Medicare, healthcare in retirement is far from “free.” Monthly premiums, deductibles, prescription costs, dental and vision care and the possibility of long-term care can create a financial drain that lasts decades, not just a few years.
Here are five healthcare expenses retirees commonly plan for, plus what they may cost over 20 years.
Assumptions for the 20-year estimates:
- Moderate: 3% annual growth
- Higher-use/higher medical inflation: 5.5% annual growth (healthcare often rises faster than general costs)
Actual costs vary by health, location, plan choices and income-related surcharges.
Medicare Part B Premiums and the Annual Deductible
For most retirees, Medicare Part B becomes one of the most reliable and unavoidable monthly healthcare bills. Part B covers everyday medical needs like doctor visits, outpatient procedures, lab work, imaging, mental health services and preventive care. While it doesn’t usually feel expensive in any single month, the cost becomes significant when you stretch it across a long retirement.
In 2026, the standard Medicare Part B premium is $202.90 per month, and the annual deductible is $283. For many seniors, this premium is automatically deducted from their Social Security check, which can make the impact feel even more immediate. What often catches people off guard is how frequently these premiums rise over time, especially as healthcare costs and federal program expenses increase.
Over a 20-year retirement, even modest annual increases can compound into a major budget item. Using moderate growth assumptions, Part B premiums alone can add up to roughly $65,000 to $85,000 per person, with the deductible adding another $7,000 to $10,000 over that same period.
Prescription Drugs: Part D Premiums and Out-of-Pocket Costs
Prescription drug spending is one of the most unpredictable parts of retirement healthcare. You might retire healthy and take only one or two medications. Even still, years down the road you could be managing several prescriptions for different conditions depending on your health as you age.
Most seniors enroll in a Medicare Part D plan to help cover prescription drugs. Average monthly premiums for Part D plans often fall in the $30 to $40 range, though the exact amount depends on your plan, your location and whether you face income-based surcharges.
Co-pays, co-insurance and uncovered medications can also create meaningful out-of-pocket costs. Newer plan designs include annual caps on covered drug spending, but specialty medications, brand-name drugs and frequent refills can still strain a fixed income.
Over 20 years, Part D premiums alone can total roughly $11,000 to $14,000 per person, assuming moderate increases. Out-of-pocket drug spending is harder to predict, although there are caps that currently max out at $2,100 in 2026. This is why it’s smart to budget for higher spending later in life, especially if chronic conditions run in the family.
Supplemental Coverage: Medigap or Medicare Advantage Plans
One of the biggest misconceptions about Medicare is that it caps how much you can spend out of pocket. Original Medicare does not have an annual out-of-pocket maximum, which means a serious illness or extended hospital stay can lead to significant bills.
To manage this risk, many seniors choose one of two paths:
- A Medigap policy, which helps cover deductibles, co-pays and co-insurance under Original Medicare
- A Medicare Advantage plan, which bundles hospital, medical and often drug coverage into one plan with its own cost-sharing structure
Medigap premiums tend to be higher and more predictable, while Medicare Advantage plans often have lower or even $0 premiums but can involve more variable out-of-pocket costs. For example, a commonly chosen Medigap option, Plan G, often averages around $160 to $170 per month, depending on location and age at enrollment.
Supplemental premiums can feel painful, but they’re often the trade-off for steadier, more predictable out-of-pocket costs when something big happens (hospitalization, surgeries, frequent specialist visits).
Dental, Vision and Hearing Care: The Medicare Gaps
This is where many retirees are genuinely surprised. Original Medicare generally does not cover routine dental care, most vision services or hearing aids. Even when coverage exists through a Medicare Advantage plan, it often comes with limits and caps that leave seniors paying a significant portion out of pocket.
These costs don’t usually arrive as monthly bills. Instead, they show up as large, occasional expenses (a crown, a pair of hearing aids, new glasses or dental implants) that can run into the thousands of dollars.
Research shows that seniors who use these services can spend hundreds per year on dental and vision care, and close to or over $1,000 at a time for hearing-related needs.
A practical budgeting approach is to assume at least $1,500 per year for combined dental, vision and hearing care. Over 20 years, that can total roughly $40,000 to $52,000, depending on inflation and healthcare usage. A dedicated sinking fund for these needs helps retirees handle large expenses without tapping emergency savings or taking on debt.
Long-Term Care: The High-Impact, Low-Predictability Cost
Long-term care is the expense most likely to reshape a retirement plan. This includes in-home care, assisted living and nursing home care. These are services that Medicare typically covers only in limited, short-term situations.
National median costs show just how quickly these expenses can escalate:
- Assisted living: Often around $70,000 per year
- Private nursing home care: Frequently $120,000-plus per year
Most people won’t need long-term care for decades, but many will need it for a period within a 20-year retirement window. Just two years of care can easily cost $200,000 to $500,000 or more, depending on the type of care and how fast costs rise.
Retirees can build a plan that includes a mix of personal savings, family support expectations, housing equity and, in some cases, long-term care insurance. Even setting aside a modest monthly amount can create a meaningful buffer over time.
“Smart” seniors don’t just save for retirement — they map out how healthcare will fit into it for decades. By breaking costs into clear categories and projecting what they might look like over 20 years, retirees gain something just as valuable as financial security: peace of mind.
Planning ahead won’t eliminate medical expenses, but it can turn them from a source of stress into a manageable, predictable part of your retirement lifestyle leaving more room for travel, family time and the things you actually want to spend your money on.
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