According to a recent report by Fidelity Investments, healthcare costs for retirees in the United States are on the rise, with a 7.5% increase expected in 2026. A 65-year-old retiree will need to budget an average of $185,500 for healthcare expenses over the course of their retirement. For couples retiring at the same age, the projected total healthcare costs will reach approximately $371,000.

This increase highlights the growing financial burden of healthcare on retirement savings. The report indicates that healthcare costs have been rising at an accelerating pace, with increases of 4% in 2024 and 5% in 2025 prior to the current year's jump.

Marlon Deleon, a financial consultant at Fidelity, emphasized that while the figure of $185,500 may seem daunting, it does not mean that retirees need to have this entire amount saved up immediately. Rather, it underscores the importance of incorporating healthcare costs into retirement income planning from the outset.

Healthcare expenses typically accumulate over many years and include Medicare premiums, supplemental insurance, prescription medications, and out-of-pocket medical services. As the aging population in the US grows, the financial pressures associated with healthcare are expected to affect more families.

According to AARP, individuals aged 65 and older now represent nearly half of those over 50. The fastest-growing segment of the elderly population is those aged 75 and older. As healthcare needs increase with age, many Americans are struggling to save adequately for retirement due to high housing costs, rising credit card debt, and expensive living expenses.

A recent survey by investment management firm Schroders revealed that about one-third of employees participating in workplace retirement plans have credit card debt exceeding their retirement savings. This financial strain often leads individuals to delay or forgo necessary medical treatments.

The issue is particularly prevalent among low-income families, but even middle-class and some high-income households are feeling the impact. A 2025 survey by West Health and Gallup found that 47% of adults earning between $90,000 and $120,000 had to sacrifice at least one basic need to cover healthcare costs. Among families earning $240,000 or more, the rate was still significant at 11%.

For those with insurance, a common coping strategy is to extend the use of prescription medications, such as by taking less or delaying new prescriptions. Approximately 14% of respondents reported using this method. The situation is even more dire for the uninsured, with around 32% indicating they had to borrow money to pay medical bills.

Rising healthcare costs are also placing pressure on businesses. A study by Mercer found that one-third of surveyed CFOs and business executives ranked healthcare benefit costs among their top three business concerns. As companies allocate more funds to employee health insurance, budgets for salary increases may shrink, and these costs could be passed on to consumers through higher prices for goods and services.

In addition, nearly half of large companies in the US plan to adjust their health insurance offerings by 2027, which may include increasing deductibles and co-pays, resulting in higher out-of-pocket expenses for employees when seeking medical care.

It is important to note that Fidelity's estimate of $185,500 does not include long-term care costs, which can be among the most significant expenses for seniors. Long-term care can encompass home health services, personal caregivers, assisted living facilities, or nursing homes, with total costs potentially rising by hundreds of thousands of dollars depending on health conditions and duration of care.

According to AARP's analysis based on federal consumer price index data, home healthcare costs increased by 7.9% in the year ending May 31, while nursing home costs rose by 4.6% during the same period. As life expectancy increases and the elderly population grows, healthcare costs will continue to consume a larger share of national economic resources.

In 2024, US healthcare spending reached $5.3 trillion, accounting for 18% of the gross domestic product. Experts from the Centers for Medicare and Medicaid Services predict this figure could approach $9 trillion by 2034, representing 20.6% of the US economy.

Financial experts advise workers not to wait until retirement is imminent to consider healthcare costs. Early planning, maintaining savings, reducing debt, and understanding Medicare benefits can help mitigate the risk of healthcare expenses depleting retirement income.