How Much a 65-Year-Old Retiring in 2025 Can Expect To Pay for Healthcare
Written by
Gabrielle Olya
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Molly Sullivan
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For many retirees, healthcare ends up being a major expense — but many underestimate just how much it will cost over the course of their retirement. Fidelity’s annual Retiree Health Care Cost Estimate aims to give retirees a reasonable estimate of how much they should budget for — and this year’s figure is far over the six-figure mark.
Here’s how much Fidelity estimates the average 2025 retiree will spend on medical expenses.
2025 Retirees Face $172K in Healthcare Costs, Fidelity Finds
Fidelity’s 2025 Retiree Health Care Cost Estimate found that a 65-year-old retiring this year can expect to spend an average of $172,500 on healthcare and medical expenses throughout their retirement. This marks a 4% increase from 2024 and continues the general upward trajectory of projected health-related retirement expenses since Fidelity’s inaugural $80,000 estimate 23 years ago.
“The steady climb in retirement healthcare costs has been consistent, so Fidelity’s 2025 estimate doesn’t come as too much of a surprise,” said John Burns, VP and financial consultant at Fidelity.
These rising costs can be attributed to a number of factors, including longer lifespans and inflation in the healthcare space that has outpaced overall inflation, he said.
“As Americans live well into their 80s and 90s, it’s important to consider how these extra years of care can impact your essential expenses in retirement,” Burns noted.
1 in 5 Americans Haven’t Planned for Retirement Healthcare
Even though healthcare costs are significant, 1 in 5 Americans said they’ve never considered healthcare needs during retirement, Fidelity found. This represents a major gap in retirement planning.
“Medical expenses are among the most unpredictable costs many face in retirement, and oftentimes they are the most substantial as well,” Burns said. “Building this into your retirement income plan is essential because without considering healthcare, retirees face a significant risk of outliving their savings.”
The sooner you start to consider how you’ll cover these expenses, the more control you’ll have over your retirement income strategy.
How HSAs Can Help Cover Retirement Healthcare Costs
Health savings accounts (HSAs) can be used to cover healthcare costs both during your working years and in retirement. They’re especially powerful because of their unique tax advantages.
“Many think of HSAs as a spending account only, but investing your HSA dollars can make a big difference in the long run,” Burns said. “The triple-tax advantage of HSAs means you can contribute pretax dollars to the account, invest them and any potential gains you see would be tax-free as well, assuming they’re used to pay for qualified medical expenses.”
If you have the means to do so, your HSA can become a dedicated healthcare fund that can help cushion unexpected medical costs down the road in retirement.
Why Medicare Alone Won’t Cover All Retirement Health Costs
Over one-third of Americans (37%) plan to rely on Medicare to cover healthcare costs in retirement — but out-of-pocket expenses not covered by the program can really add up.
“While Medicare serves as the foundation of your retirement healthcare, it’s not the full safety net that many expect it to be,” Burns said. “Retirees still need to cover things like copays, dental and vision, and long-term care, all of which can put their financial security at risk without a sound retirement income plan.”
Americans should plan ahead for ways to pay for expenses that are not covered by Medicare.
“Every situation is unique, but options like Medigap policies, HSAs or a dedicated savings bucket for health expenses are ones to consider,” Burns said. “Speaking with a financial advisor is ultimately the best way to determine the best approach for you.”
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