Getting Ready to Retire? Be Sure Your Budget Covers Health Care

Fidelity Investments recently released its annual Retiree Health Care Cost Estimate report and the numbers are a solid punch in the 401K.[SG1] 

A 65-year-old planning to retire in 2025 can expect to spend an average of $172,000 on health care and medical expenses during retirement years. This represents a more than 4% increase over the 2024 report and a substantial increase from $80,000, which is the projection from Fidelity’s first report in 2002.

Even with the abundance of blogs and experts offering retirement-planning advice, recent research found 1 in 5 Americans have never considered their health care needs or costs during retirement. That figure rises to 1 in 4 among Gen X.

“Year after year, so many Americans underestimate how much they’ll need to save to cover health care costs in retirement,” Shams Talib, head of Fidelity Workplace Consulting, said in a news release.

The average breakdown of a retiree’s health care costs:

• Out-of-pocket prescription drug costs: 9%
• Medicare Part B and Part D premiums: 44%
• Other medical expenses (including copayments and deductibles): 47%

Are you saving to cover health care costs during your retirement? Are you retired and juggling higher costs? Share your story with Voices for Affordable Health.