How Much the Average Middle-Class Household Spends on Healthcare After 65

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For middle-class couples, especially those over the age of 65, the rising costs of healthcare are a serious worry. Healthcare is an expense that continues to be one of the largest and most unpredictable costs facing American retirees in 2025.

Planning for medical expenses is increasingly critical as healthcare costs continue to outpace wages and even inflation. And with Medicare now providing less comprehensive coverage than it used to, this is adding to the cost of healthcare for many retirees, and is another reason why planning more effectively for it is even more important.

GOBankingRates dug through data and research to find out what the average middle-class retiree spends on healthcare costs after age 65.

Average Annual Healthcare Spending After 65

Healthcare in retirement costs money, and the older you get, the more it costs in most cases. It’s something to start thinking about when you’re younger, when you’re more able to take action, such as putting money aside or purchasing the right insurance policies to help you deal with rising healthcare costs when you are older and need the funds.

It’s one of the reasons that investing in a pension is crucial during your prime earning years, usually between someone’s late 40s and early 50s.

The average 65-year-old couple in 2025 will spend around $12,800 on health care in their first year of retirement, per Fidelity. This represents approximately 21% of the total average retirement spending of around $60,000, according to the Federal Reserve Bank of St. Louis.

In most cases, healthcare expenses for retirees fall into four main areas:

1. Insurance premiums (e.g., Medicare Part B, Part D, and supplemental coverage)
2. Medical services that Medicare does not fully cover
3. Prescription medications (some cost more than others, and some are needed consistently, especially with life-long conditions)
4. Medical supplies and equipment.

Assuming both people over 65 need medical treatment, or even just a handful of prescriptions every month, combined, these costs are a burden that many couples underestimate when planning for retirement.

Take look at how and why these costs are so high, and how you can plan and save for them right now.

Lifetime Healthcare Costs: Long-Term Projections

Healthcare costs are usually cumulative during people’s retirement years.

One reason for that is increased life expectancies. Multiple financial institutions have released estimates that project a worrying picture for middle-class retired couples:

1. Fidelity’s 2025 projections show dramatic increases in 2025, compared to previous years. A 65-year-old who retired in 2025 can expect to spend $172,500, up from $165,000 in 2024, on healthcare during retirement. This is almost a 5% year-over-year increase. However, this figure only applies to an individual, meaning couples face potentially double this amount. Please remember, this means a couple over 65 could spend as much as $345,000 during their retirement years!
2. RBC Wealth Management presents an even more alarming scenario. RBC’s projected lifetime cost for healthcare for the average 65-year-old couple is $683,306. And that doesn’t factor in long-term care costs, which could be $100,000 (or more) a year.
3. Milliman’s Retiree Health Cost Index offers a less expensive but still substantial estimate. The average 65-year-old couple will need $395,000 in combined savings to afford the cost of certain Medicare plans in retirement.

In comparison to 2023 costs, they estimate that couples who retired in 2024 would have needed to save approximately $7,000 extra if they had Original Medicare plus Medigap and Part D coverage — or $8,000 extra if they have Medicare Advantage plus Part D coverage.

Long-Term Care: The Biggest Potential Expense

One thing we need to remember about retirement healthcare costs: It only costs more if it’s either long, long-term, unexpected, or you are unhealthy to start with.

For people who are healthier when they retire, there’s a good chance that they will face fewer health issues as they get older. However, that isn’t always guaranteed; therefore, we need to plan in terms of a potential worst-case scenario, just in case.

Long-term care represents the most financially devastating healthcare expense for middle-class couples. The average annual cost of a private room in a nursing home is $116,800, while assisted living facilities command an average yearly fee of over $50,000, per Charles Schwab.

Medicare generally doesn’t cover long-term care in a nursing home. This means that you pay 100% for non-covered services, including most long-term care.

Medicare only provides up to 20 days of nursing care that are 100% covered. After day 21 and up to day 100, patients will pay a co-pay of up to $200 per day.

From day 101, all Medicare coverage ends, and all payments are the patient’s responsibility. That’s why many people end up selling their homes to pay for the cost of long-term care.

Why Healthcare Costs Keep Increasing

Several factors drive the relentless increase in retirement healthcare expenses. Healthcare inflation consistently outpaces inflation, with medical costs rising 3% to 5% annually compared to overall inflation rates of 2% to 3%, according to Charles Schwab.

Getting older itself creates extra expenses. Average payments for monthly premiums were $1,081 at age 64. At age 30, those same payments are usually around $422. This shows how age dramatically increases insurance costs even before Medicare eligibility begins.

How To Plan Strategies for Healthcare in Retirement

Here are a few different ways to plan for retirement costs:

• Health savings accounts (HSAs): These offer triple tax advantages and should be maximized when available. Contributions are tax-deductible, growth is tax-free and withdrawals for qualified medical expenses are not taxed.
• Medicare plan selection: Couples must choose between Original Medicare with Medigap supplemental insurance versus Medicare Advantage plans. Every option has different cost structures and provider networks that can significantly impact total expenses.
• Long-term care insurance: Annual premiums with 3% growth for a healthy 60-year-old average $2,585 for males and $4,400 for females. But with nursing home costs exceeding $116,000 annually, it may be more expensive not to have it. It’s more crucial than ever to buy coverage while still healthy and relatively young (in your 40s, and maintaining payments consistently is the best plan).
• Emergency fund maintenance: Specifically, healthcare expenses help couples manage unexpected medical costs without derailing their overall retirement financial plan.
• Tax planning: For deductible medical expenses can provide some relief. However, the thresholds are high and require careful documentation for the IRS and estate planning considerations.

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