Retiree health costs spike 7.5% in latest estimate from Fidelity

People retiring this year can expect medical expenses to take a significantly bigger bite of their savings, according to a new report from Fidelity Investments.

Healthcare costs for retirees are accelerating fast. Average lifetime healthcare expenses for a 65-year-old retiring in 2026 are projected to rise 7.5%, following increases of 5% last year and 4% in 2024, Fidelity said Tuesday. That means the average retiree will pay $185,500 and $371,000 for couples.

READ MORE: Here's how much employees need to save for healthcare in retirement

"The $185,500 figure isn't meant to suggest people need to figure out a way to get that money right away, but it does reinforce the importance of incorporating healthcare costs into a retirement income plan," said Marlon Deleon, a financial consultant at Fidelity.

The financial burden is also poised to affect more Americans as the population ages. Adults 65 and older now make up about half of everyone over age 50, according to AARP, and the 75-and-older population is growing the fastest.

Americans of all ages and incomes are delaying or skipping medical care. High housing costs and rising levels of credit-card debt are leaving more families and individuals unable to save. A recent Schroders U.S. Retirement survey found that a third of participants in workplace retirement plans said they had more in credit-card debt than they had in retirement savings.

READ MORE: Inflation, health care costs top retirees' concerns, survey finds

While making sacrifices to pay for healthcare is far more common among lower-income households, a 2025 West Health-Gallup Center on Healthcare in America survey found that 47% of adults earning $90,000 to less than $120,000 a year made at least one daily tradeoff, while 11% of households earning $240,000 or more did the same.

The most common tradeoff among insured adults was prolonging a current prescription, cited by 14% of respondents. Among uninsured adults, 32% said they borrowed money to pay for healthcare expenses.

It's not just consumers feeling the heat from medical inflation. A recent Mercer study of chief financial officers and finance leaders found that one-third ranked healthcare benefit costs among their top three operating expense concerns. For companies, higher spending on healthcare can hold down employee wage growth and contribute to price increases for products and services, the report said.

A separate Mercer survey found that almost half of large U.S. employers plan to make changes to medical plans such as raising deductibles or co-pays that will result in higher out-of-pocket costs for workers in 2027. 

The cost estimate in Fidelity's report excludes daunting long-term care expenses, which can add hundreds of thousands more to lifetime health costs. Home healthcare costs jumped 7.9% in the 12-month period ended May 31, while nursing home costs rose 4.6%, according to an AARP Public Policy Institute analysis of the Bureau of Labor Statistics Consumer Price Index data.

As Americans live longer and account for a growing share of the population, healthcare is consuming an ever-larger slice of the economy. Health spending totaled $5.3 trillion, or 18% of U.S. gross domestic product, in 2024 and is projected to reach nearly $9 trillion, or 20.6% of GDP, by 2034, according to July projections from actuaries at the US Centers for Medicare and Medicaid Services.