How much should I budget for healthcare in retirement?
Medicare & healthcare
Fidelity's 2025 estimate: a 65-year-old couple retiring today will spend roughly $330,000 on healthcare over retirement, excluding long-term care. That's about $13,000-$15,000 per year per person, mostly in premiums, deductibles, and out-of-pocket costs.
What that $330,000 actually covers
Medicare premiums (Parts B, D, supplements), deductibles, copays, dental, vision, hearing (none of which Original Medicare covers), and out-of-pocket prescription costs.
What it doesn't cover
Long-term care. The median annual cost of a private nursing home room in 2025 is over $116,000. Long-term care insurance, hybrid life-LTC products, or self-funding via dedicated assets are the main planning paths.
The HSA opportunity most people underuse
HSAs are triple tax-advantaged: deductible going in, tax-free growth, tax-free for qualified medical. After 65, you can use HSA dollars for any purpose (taxed as income). Maxing an HSA in your 40s and 50s and investing it can build a six-figure healthcare bucket by 65.
What people often get wrong
- Assuming Medicare covers everything
- Ignoring long-term care planning until your 70s, when premiums become unaffordable or coverage is denied
- Treating the HSA as a checking account instead of an investment account
What to think about next
- Add a healthcare line to your retirement budget at $14,000/year/person, indexed to medical inflation.
- Decide your long-term care strategy before age 60.
- If eligible, max your HSA and invest it.
When to consider working with a CFP®
Working with a CFP® can help when these decisions feel intertwined, taxes, investments, cash flow, and life goals tend to move together, and a planning relationship can offer structure, prioritization, and accountability over time.
Frequently Asked Questions
When is the right age to buy LTC insurance?
Usually between 50 and 65. Earlier and you pay premiums longer. Later and premiums spike or you may be denied.
Talk to a CFP® who works with high earners.
Connect with a CFP® to help you navigate this decision and build a comprehensive financial strategy.
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