Retirees need at least $185K set aside to cover healthcare, even with Medicare, study finds
Those looking to retire at 65 years old may need to set aside as much as $185,000 for medical expenses alone for the remainder of their lives, even with the help of Medicare, a new study found.
According to the report from Fidelity Investments, this estimate has doubled since it first made its evaluation in 2002. Further, the year-over-year increase, based on data from 2024 to 2025, is the largest it has seen.
A year prior to this analysis, researchers at Fidelity estimated $172,500 was a safe target for medical needs. That represents a 7.5% spike.
This is all in addition to other retirement expenses.
According to Fidelity, the rising price of care is to blame, specifically the price tag of managing chronic conditions.
Fidelity emphasized that its estimate assumes that the retiree is enrolled in Medicare, including Part D for prescriptions, and includes all costs of care such as copays for visits, procedures and drugs.
Part of the reason for the rise, Fidelity said, is increased care utilization—Americans are getting older, with 4 million expected to enter retirement age in 2026 alone, with similar numbers expected for 2027.
Medicare not meeting expectations
The group said the numbers are a warning to seniors who expect Medicare will cover all their bills—that simply isn’t the case.
“Medicare is a critical part of retirement health coverage, but it does not eliminate every health care expense,” Steve Betts, head of Fidelity Health, said in a statement.
Fidelity added that its survey shows 54 percent of people about to enter retirement believe Medicare will be enough to support them in their twilight years, but the program has never been designed to cover all healthcare costs, which are sometimes supported by Medicaid and other programs for those with lower incomes.
More importantly, Fidelity’s estimates do not include expenses related to nursing homes, home care and other long-term healthcare needs that are more intensive. In those cases, $185,000 may not be enough. That estimate is for those who remain healthy and independent.
Fidelity said that over one-quarter (26%) of those it surveyed identify healthcare expenses as a top retirement challenge. Most (81%) said they were at least aware the costs will be high, and they hope their nest egg will be able to cover anything that comes up.
“Financial planning for retirement is about more than reaching a savings target, especially as retirement itself continues to evolve,” Shams Talib, head of Fidelity Workplace Consulting, stated. “Whether Americans fully stop working, phase into their retirement, or pursue new ways to stay engaged, healthcare consistently remains one of the largest expenses they will face. Providing a benchmark to consider can help them plan with purpose and more confidence.”
For more, read the full study by clicking here.
Chad is an award-winning writer and editor with over 15 years of experience working in media. He has a decade-long professional background in healthcare, working as a writer and in public relations.