How Much Does Healthcare Cost in Retirement? (2026 Data)

The Numbers: Average Healthcare Spending in Retirement

Healthcare is the single largest expense most retirees face — often surpassing housing. According to Fidelity's 2025 Retiree Health Care Cost Estimate and Milliman's Retiree Health Cost Index, the typical retiree spends between $6,000 and $12,000 per year on healthcare, depending on age, health status, and coverage decisions.

Here's how those costs break down by category for a single retiree at age 65 in 2026:

These figures represent a healthy 65-year-old. If you have chronic conditions — diabetes, heart disease, COPD — expect costs 30–50% higher. And crucially, these costs accelerate with age: by 85, annual spending per person can exceed $27,000.

Lifetime Healthcare Cost Estimates

Looking at total lifetime spending from age 65 onward:

• Single retiree: $315,000 (Fidelity 2025 estimate)
• Couple: $630,000–$661,000 (Milliman 2025 index)
• With long-term care: Add $100,000–$300,000 depending on duration

Healthcare inflation runs at 5.5–6.5% annually — roughly double the general inflation rate. This means every year you delay planning, the gap between what you've saved and what you'll need grows wider.

Medicare Coverage Gaps: What Medicare Doesn't Cover

Many pre-retirees assume Medicare covers everything. It doesn't. Understanding these gaps is critical to building an accurate healthcare budget.

Dental Care

Traditional Medicare does not cover routine dental care — cleanings, fillings, crowns, dentures, or implants. The average retiree spends $1,000–$3,000 per year on dental care. A single implant can cost $3,000–$6,000. Some Medicare Advantage plans include limited dental benefits, but coverage caps are typically low ($1,000–$2,000/year).

Vision Care

Medicare doesn't cover routine eye exams, glasses, or contact lenses. Cataract surgery is covered, but everything else — progressive lenses, glaucoma screenings outside of high-risk categories, updated prescriptions — comes out of pocket. Budget $300–$800 per year for vision expenses.

Hearing Aids

Hearing aids are one of the most expensive Medicare gaps. A pair of quality hearing aids costs $2,000–$7,000 and typically needs replacement every 3–5 years. Medicare covers diagnostic hearing exams but not the devices themselves.

Long-Term Care

This is the biggest gap of all. Medicare pays for short-term skilled nursing (up to 100 days) after a hospital stay, but it does not cover custodial care — the kind of help most people actually need as they age (bathing, dressing, meal preparation). Long-term care costs:

• Home health aide: $61,776/year (national median, 44 hrs/week)
• Assisted living: $70,800/year
• Nursing home (semi-private): $111,325/year
• Nursing home (private room): $127,750/year

About 70% of people over 65 will need some form of long-term care. The average duration of need is 3 years. That's potentially $200,000–$380,000 in costs that Medicare simply won't pay.

How to Budget for Healthcare in Retirement

The good news: you can prepare for these costs with the right strategies. Here are the most effective approaches for 2026 and beyond.

HSA Strategy: The Triple-Tax-Advantage Play

If you're still working with a high-deductible health plan, a Health Savings Account (HSA) is the single best vehicle for healthcare savings. HSAs offer a triple tax advantage: tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses.

2026 HSA limits: $4,300 (individual), $8,550 (family), plus $1,000 catch-up if you're 55+. Unlike a 401(k) or IRA, there are no required minimum distributions. After age 65, you can withdraw for any purpose (taxed as ordinary income, like an IRA) — making it a flexible retirement account even beyond healthcare.

Best practice: Pay current medical expenses out of pocket and let your HSA grow invested in index funds. Keep receipts — you can reimburse yourself decades later, tax-free.

Medigap Plans: Closing the Gaps

Medigap (Medicare Supplement) plans cover the 20% of costs that Medicare Part B doesn't pay, plus hospital deductibles and other out-of-pocket expenses. Plan G is the most popular choice for new enrollees, covering nearly everything except the Part B deductible ($257 in 2026).

Key tip: Medigap premiums vary dramatically by carrier — sometimes by $50–$100/month for identical coverage. Shop plans annually during your birthday month, when many states offer guaranteed-issue rights that prevent medical underwriting.

IRMAA: The Medicare Surcharge You Might Not Know About

Income-Related Monthly Adjustment Amount (IRMAA) is a surcharge added to your Medicare Part B and Part D premiums if your modified adjusted gross income exceeds certain thresholds. In 2026:

• Single filers above $106,000: Pay $50–$400+ more per month for Part B
• Married filing jointly above $212,000: Same surcharge tiers
• Part D: Additional $12–$81/month surcharge at same income thresholds

IRMAA uses your tax return from two years prior. A large Roth conversion or capital gain in one year can trigger higher premiums two years later. Plan withdrawals carefully to stay below thresholds — or at least be aware of the trade-off.

Healthcare Costs by State: Where You Retire Matters

Healthcare costs vary significantly by geography. Medigap premiums, provider costs, and prescription prices all differ by state. Here are the most and least expensive states for retiree healthcare in 2026:

5 Most Expensive States

5 Least Expensive States

The difference between the most and least expensive states can be $5,000–$6,000 per year — or $100,000+ over a 20-year retirement. If you're flexible about where you retire, this is one of the highest-impact decisions you can make. See our guide on the best states to retire for taxes in 2026 for a complete picture.

International Retirement Healthcare Costs

Retirement healthcare costs vary dramatically across countries. If you're considering retiring abroad — or simply want context for how US costs compare — here's how the numbers stack up.

United States vs. Canada

Canada's single-payer system covers most hospital and physician services through provincial health plans. Canadian retirees pay $0 in premiums for basic healthcare (funded through taxes). However, dental, vision, prescription drugs, and long-term care are not universally covered — similar gaps to US Medicare. Out-of-pocket costs for a Canadian retiree average $2,000–$4,000 CAD/year ($1,500–$3,000 USD), roughly one-third of what American retirees pay. The trade-off: longer wait times for specialists and elective procedures.

United States vs. Australia

Australia's Medicare system (distinct from US Medicare) covers GP visits, public hospital care, and subsidized prescriptions through the Pharmaceutical Benefits Scheme. Retirees with private health insurance pay $2,000–$5,000 AUD/year ($1,300–$3,300 USD) in premiums. Total out-of-pocket healthcare costs for Australian retirees average $3,000–$5,000 AUD/year — significantly less than the US equivalent. Australia also has a more robust aged-care system, though costs for residential care facilities are rising.

United States vs. Brazil

Brazil offers universal healthcare through the SUS (Sistema Unico de Saude), but quality varies widely by region. Many Brazilian retirees and expats purchase private health plans costing $1,500–$4,000 BRL/month ($300–$800 USD/month) for comprehensive coverage. For American expats retiring in Brazil, healthcare costs can be 50–70% lower than in the US — particularly for dental work, elective procedures, and prescription drugs. However, specialized care in smaller cities may require travel to Sao Paulo or Rio de Janeiro.

Regardless of where you plan to retire, building a healthcare cost estimate into your retirement plan is essential. Our free retirement calculator helps you model healthcare inflation alongside your other expenses.

Frequently Asked Questions

What is the average healthcare cost in retirement per year?

The average retiree spends between $6,000 and $12,000 per year on healthcare, depending on age and coverage choices. At age 65, a single retiree typically pays around $8,500/year. By age 85, annual costs can exceed $27,000 per person due to increased medical needs and healthcare inflation running at 5.5–6.5% annually.

How much should I budget for healthcare in retirement?

A 65-year-old retiring in 2026 should budget approximately $315,000 per person ($630,000 per couple) for lifetime healthcare costs. This includes Medicare premiums, supplemental insurance, prescription drugs, dental, vision, and out-of-pocket expenses. Use a retirement calculator with healthcare-specific inflation rates of 5.5–6.5% for accurate planning.

What does Medicare not cover?

Medicare does not cover dental care (cleanings, fillings, dentures), routine vision care (eye exams, glasses, contacts), hearing aids and exams, long-term care (nursing homes, assisted living), and most care received outside the United States. These gaps can cost retirees $3,000–$8,000+ per year out of pocket.

How can I reduce healthcare costs in retirement?

Key strategies: (1) Max out your HSA before retirement for triple tax advantages. (2) Shop Medigap plans annually during your birthday month. (3) Use GoodRx for prescriptions that are cheaper outside Part D. (4) Stay below IRMAA income thresholds to avoid Medicare surcharges. (5) Consider a hybrid life insurance policy with a long-term care rider instead of standalone LTC insurance.

Is $500,000 enough for retirement healthcare costs?

For a single retiree, $500,000 may be sufficient if invested wisely and you remain relatively healthy. For a couple, $500,000 falls short of the estimated $630,000–$660,000 needed. If you have chronic conditions or anticipate long-term care, you may need $800,000–$1,000,000+ as a couple.

What is the average monthly healthcare cost for a retired couple?

In 2026, a retired couple at age 65 can expect to pay approximately $1,400–$1,700 per month for healthcare. This includes Medicare Part B ($370/month for two), Part D drug coverage ($100/month), Medigap supplemental insurance ($300–$400/month), dental coverage ($100/month), and out-of-pocket costs ($530–$800/month). These costs increase each year due to healthcare inflation.