Quick Answer: Planning for healthcare costs in retirement requires its own assumption, separate from general inflation. Fidelity estimates a 65-year-old retiring in 2026 will spend $185,500 on healthcare, and $371,000 for a couple. Medical costs climb far faster than Social Security raises, so your plan needs dedicated liquidity for the gap.
Planning for healthcare costs in retirement breaks down when you treat medical spending like any other expense. Most retirement plans apply one inflation rate to everything. Groceries, travel, and medical care all get the same 3% bump each year.
Medical care does not follow that rule. It never has. Fidelity has tracked this gap for 25 years, and the spread keeps widening.
How Much Will Healthcare Cost in Retirement
Fidelity projects $185,500 in lifetime healthcare spending for a 65-year-old retiring in 2026. A couple retiring at the same age faces roughly $371,000. Those figures assume Original Medicare plus Part D coverage.
The trend matters more than the number. Fidelity’s estimate rose about 4% in 2024, then 5% in 2025, then 7.5% this year. The increases themselves keep accelerating. Back in 2002, the first estimate stood at $80,000.
Two details deserve attention. First, roughly 45% of that total goes toward Medicare Part B and Part D premiums alone. Second, the estimate excludes long-term care entirely. Nursing care, assisted living, and in-home support all sit outside the figure.
Why General Inflation Assumptions Fail
Healthcare inflation and your income raise move at different speeds. HealthView Services projects long-term healthcare inflation near 5.8% annually. Meanwhile, it projects Social Security cost-of-living adjustments averaging 2.4%.
That gap compounds quietly. At 5.8%, a cost roughly doubles in about 12 years. At 2.4%, income takes about 30 years to double. Your medical bill therefore outruns your benefit check by a wide margin.
The 2026 numbers show the pattern clearly. Medicare Part B and Medicare Advantage premiums deducted from Social Security rose 9.7% this year. The Social Security COLA came in at 3.2%. HealthView estimates a healthy 65-year-old couple will need 84% of lifetime Social Security benefits just to cover healthcare.
What Actually Drives the Increases
Fidelity points to three forces, and none of them looks temporary.
- Rising prices for care itself. Medical services cost more each year than the year before.
- Higher utilization. Retirees use more services as they age, and they live longer than previous generations.
- Chronic condition management. Ongoing conditions generate steady, recurring costs rather than isolated events.
Each force pushes in the same direction. Together, they explain why a flat inflation assumption underfunds the category year after year.
The Real Risk Is Liquidation Timing
The invoice amount rarely causes the lasting damage. The timing does.
Picture a Tucson family facing a significant medical year during a market decline. Their plan holds no dedicated reserve for the expense. Consequently, they sell equities at depressed prices to cover it.
That single decision reshapes the entire portfolio trajectory. Assets sold at a low never participate in the recovery. The withdrawal permanently reduces what compounds forward, and what eventually reaches the next generation. Sequence risk turns a manageable expense into a lasting setback.
How Do You Build the Gap Into a Plan
You give healthcare its own line, its own assumption, and its own funding source. Three structural moves handle most of the work.
Model Healthcare Separately
Apply a distinct inflation rate to medical spending in your projections. Using one blended rate across all expenses hides the shortfall until it arrives. Your plan should show the healthcare line growing faster than everything else.
Hold Dedicated Liquidity
Maintain a reserve sized specifically for medical years and premium increases. That reserve keeps your long-term holdings invested through downturns. It exists to prevent forced selling, not to generate returns.
Match Predictable Income to Predictable Costs
Medicare premiums arrive every month, reliably. Contractual income sources can meet those recurring obligations directly, subject to the terms of the issuing company. Pairing steady income against steady expenses then frees the rest of the portfolio for long-term growth. Our income planning guide explains how the pieces fit together.
Where Global Investment Strategies Fits
We have coordinated income plans for Tucson families since 2009. Healthcare planning never sits in isolation within that work. It connects to withdrawal sequencing, Social Security timing, tax exposure, and legacy intent at once.
We work alongside your CPA and attorney rather than replacing them. Our role keeps the moving pieces aligned. Our retirement planning page walks through that process in detail.
Review Your Healthcare Assumption
Pull up your retirement projection and find the healthcare line. Check the inflation rate applied to it. If that number matches everything else in the plan, the plan likely understates the cost.
Families across Tucson, Oro Valley, Marana, and the Catalina Foothills revisit this assumption regularly. Request a private conversation and we will review your healthcare projection against your full income picture.
Global Investment Strategies provides educational planning concepts and works alongside your qualified legal, tax, and financial professionals. This article is educational and is not individualized tax, medical, or financial advice. Cost estimates cited are industry projections and will vary by individual circumstance.
