How much do I need for healthcare in retirement?

Fidelity has published its Retiree Health Care Cost Estimate every year since 2002, and the 2026 edition, released in July, is the 25th. It projects that someone retiring at 65 in 2026 will spend an average of $185,500 on healthcare over retirement, up from $172,500 in 2025. It assumes Original Medicare Parts A and B plus a Part D drug plan, and it does not include long-term care.

Fidelity also splits the figure. About 45% goes to Medicare Part B and Part D premiums, 48% to other medical costs (copays, deductibles, coinsurance and services Medicare does not cover, such as much of vision and hearing), and 7% to prescription costs Part D leaves to you. Applied to $185,500, that is roughly $83,500 in premiums, $89,000 in other medical spending and $13,000 in drugs.

EBRI, the Employee Benefit Research Institute, answers a slightly different question. Its March 2026 issue brief, "Projected Savings Medicare Beneficiaries Need for Health Expenses in Retirement up Again in 2025", simulates how long people live and how investments perform, then asks how much a 65-year-old needs saved to have a 50% or 90% chance of covering premiums and median drug costs. Fidelity gives an average spend. EBRI gives a savings target with a probability attached, which is closer to the question most people are asking.

The table puts both sources side by side. The EBRI rows assume average premiums and median drug spending except where noted; the Fidelity couple row doubles the single figure, which assumes both partners spend about the same.

Women need more than men in every row because they live longer on average, so they pay premiums for more years. The gap between the 50% and 90% columns is the price of certainty: the extra money covers the case where you live well past average.

Retirement age. Every published estimate starts at 65 because that is when Medicare starts. In EBRI's 2026 Retirement Confidence Survey, workers expect to retire at a median age of 65, but retirees report they actually stopped at 62. Each year between leaving work and Medicare is paid through retiree coverage, COBRA, a spouse's plan or a marketplace policy, and none of it is in the figures above.

Medigap or Medicare Advantage. EBRI's couple target at 90% confidence is $405,000 with Medigap Plan G and $203,000 with Medicare Advantage. Advantage plans tend to cost less up front, and EBRI notes they often come with limited networks and prior approval for some drugs or services.

Prescriptions. The Inflation Reduction Act capped Part D out-of-pocket drug spending at $2,000 in 2025, and CMS set the 2026 cap at $2,100. The cap limits the damage, but EBRI's high-drug-cost couple still needs $469,000 for a 90% chance, because premiums and other spending continue.

Income. Medicare premiums rise with income. For 2026, CMS applies the income-related adjustment once modified adjusted gross income exceeds $109,000 for an individual return or $218,000 for a joint one, and at the top bracket the Part B premium is $689.90 a month. Large IRA withdrawals or Roth conversions in the years before Medicare can push a retiree into a higher bracket, since the Social Security Administration bases the surcharge on an earlier tax return.

Health and longevity. A long life is the single biggest driver of total cost, because premiums are paid every month for as long as you live. That is why the 90% targets sit well above the averages.

The gap years are where retirement healthcare budgets most often break, because there is no published national estimate to plan around. Premiums depend on age, state, plan tier and household income, so the honest way to price them is with real quotes for your own zip code from HealthCare.gov or your state exchange, a COBRA election notice from your employer, or the terms of any retiree plan.

Three things shape the cost. COBRA usually lets you keep an employer plan for a limited period, but you pay the full premium the employer used to subsidise. Marketplace premium tax credits are tied to modified adjusted gross income, so a retiree drawing from taxable brokerage basis or Roth contributions reports less income than one drawing the same amount from a traditional IRA. And a spouse who keeps working can often carry the other on an employer plan until 65.

A practical approach is to price the bridge as its own line, multiply the annual premium plus a deductible allowance by the number of years until 65, and hold that sum outside the long-term portfolio. A three-year bridge funded this way does not depend on the market being kind in the first years of retirement.

Fidelity says its estimate excludes long-term care, so that cost has to be planned for separately. Original Medicare generally does not pay for routine dental care, dentures, eyeglasses or hearing aids, so those arrive as cash costs or through an Advantage plan's extra benefits.

Long-term care is the large one. Custodial care, the help with bathing, dressing and eating that most long stays involve, is not covered by Medicare, and it is paid from savings, long-term care insurance, or Medicaid once assets run down. Because it is both uncertain and expensive, most plans treat it as a separate reserve or insurance decision rather than folding it into the healthcare number.

The estimates are built from line items that CMS publishes each year. These are the 2026 amounts most retirees meet first.

A couple both paying the standard Part B premium spends $4,869.60 a year on it before any Part D or Medigap premium, deductible or copay. That one line is why premiums account for close to half of Fidelity's lifetime total.

A health savings account is the account built for this bill. Contributions are deductible, growth is untaxed, and withdrawals for qualified medical expenses are tax free at any age. IRS Revenue Procedure 2025-19 sets the 2026 limit at $4,400 for self-only high-deductible coverage and $8,750 for family coverage, with a further $1,000 catch-up from age 55.

Take a married couple, both 45, on a family high-deductible plan. They contribute the full $8,750 each year for 20 years until Medicare at 65, invest the balance, and assume a 5% annual return. The future value of 20 equal contributions at 5% is $8,750 times 33.066, or about $289,300.

Against EBRI's targets, that clears the $267,000 needed for an even chance with Medigap Plan G and falls about $116,000 short of the $405,000 needed for a 90% chance. The example is deliberately conservative on contributions, since the IRS indexes the limit for inflation each year and the $1,000 catch-up from 55 is left out. It is generous in another way: the target itself will grow with medical inflation over 20 years, so a figure set in 2026 dollars is a floor, not a finish line.

The same arithmetic for a single person, starting at 55 with $5,400 a year (the $4,400 limit plus the catch-up) for 10 years at 5%, gives $5,400 times 12.578, or about $67,900. That covers roughly a third of EBRI's $212,000 90% target for a man, and the remainder comes from ordinary retirement savings. Starting late is the reason most people end up paying a large share of healthcare from a 401(k) or IRA rather than an HSA.

Fidelity's 2026 release adds one more point: about 40% of Americans with an HSA have not invested their balance at all. Cash in an HSA earns little, and the 20-year projection above depends on the money being invested.

Walnut is an AI investing app. It cannot price a Medicare plan or forecast your medical bills, but it can keep the savings side of this plan visible.

Connect your brokerage. Linking an account lets Walnut read your real holdings and show how they have done against the S&P 500, so the money set aside for healthcare is judged on actual numbers rather than a guess.

Set a goal. Pick a target, say EBRI's $267,000 or $405,000 for a couple, with a horizon that ends at 65. Walnut shows whether the current balance and pace are on track for it.

Build a basket and invest on a schedule. A basket is a set of holdings with target weights. You can set a recurring investment into it, and Walnut places the orders at your broker using cash already in that brokerage account. Walnut does not move money from your bank; you or your broker's own transfer puts the cash there.

Ask the assistant. The assistant reads your connected portfolio and can walk through questions like which holdings carry the most weight, how the portfolio has done against the S&P 500, or what a goal would need each month to stay on track. If you are choosing where to open a brokerage account, Public and Robinhood both connect.

Treating the estimate as the whole bill. Neither Fidelity nor EBRI includes long-term care, which is a separate and often larger cost. Our long-term care cost statistics collect the figures on it.

Starting the clock at 65. Retiring at 62, the median age retirees reported to EBRI in 2026, means three years of private coverage before any of these estimates apply. The retire-at-65 guide covers the Medicare handoff in more detail.

Leaving HSA money in cash. Fidelity found 40% of HSA holders had not invested. A balance that never grows loses the main advantage of the account.

Ignoring the income surcharge. A large Roth conversion or IRA withdrawal can raise Part B and Part D premiums for a year. Spreading taxable income across years is a common way to stay under the $109,000 and $218,000 thresholds.

Spending the HSA early by default. Paying current medical bills from other cash and keeping receipts lets the HSA keep compounding. The HSA withdrawal rules explain how reimbursement for older expenses works.

Healthcare is one line inside total retirement spending, not a separate pot that sits on top of it. A common approach is to estimate annual retirement spending including premiums and out-of-pocket costs, subtract Social Security and any pension, and size the portfolio against the gap, as the how much do I need to retire guide lays out. The healthcare figures here help check that the spending estimate is not missing its fastest-growing line.

For the account mechanics, see how an HSA works and how much you can contribute to an HSA. For the wider data set, including how the Fidelity figure has grown since 2002, see healthcare costs in retirement statistics and HSA statistics.

Fidelity's 2026 Retiree Health Care Cost Estimate, as reported by the NRMLA and FOX coverage of its July 2026 release. EBRI Issue Brief, Projected Savings Medicare Beneficiaries Need for Health Expenses in Retirement up Again in 2025 (March 5, 2026), and the 2026 Retirement Confidence Survey fact sheet #2. CMS, 2026 Medicare Parts A and B premiums and deductibles and final CY 2026 Part D redesign program instructions. IRS Revenue Procedure 2025-19 and Publication 969. Walnut is informational and is not an investment adviser. This guide is educational and not personalized financial advice.