Fidelity's 2025 Retiree Health Care Cost Estimate says a 65-year-old couple retiring today will need approximately $315,000 to cover healthcare costs in retirement. That number doesn't include long-term care. Read that again: $315,000 AFTER Medicare, AFTER premiums, just for the healthcare costs that remain. This is the expense that derails more retirement plans than any other, and the one most retirees plan for least.
Where the Money Actually Goes
The Costs Medicare Doesn't Cover
Medicare is excellent insurance — but it's not comprehensive insurance. The gaps are significant and often surprising to new enrollees.
What Medicare Covers vs. What You Pay Out of Pocket
| Service | Medicare Coverage | Your Estimated Annual Cost |
|---|---|---|
| Most doctor visits | 80% after deductible | $500-$1,200 in copays/coinsurance |
| Hospital stays | Days 1-60 after $1,676 deductible | $1,676+ per hospitalization |
| Dental (cleanings, fillings, crowns) | NOT covered | $1,000-$3,000 |
| Vision (exams, glasses, contacts) | NOT covered (except medical eye conditions) | $300-$800 |
| Hearing aids | NOT covered under Original Medicare | $1,500-$6,000 per pair |
| Long-term care (nursing home, home aides) | Very limited (100 days max skilled nursing) | $60,000-$120,000/year if needed |
| Dental implants, dentures | NOT covered | $3,000-$30,000+ |
| Prescription drugs | Part D with $2,000 annual cap in 2026 | $0-$2,000 depending on medications |
Building Your Healthcare Budget
Annual Healthcare Budget Worksheet
Strategies to Reduce Healthcare Costs
- Use an HSA (Health Savings Account) if you're still working with a high-deductible plan before Medicare — contributions are tax-deductible, growth is tax-free, and withdrawals for medical expenses are tax-free. Triple tax advantage.
- Compare Medigap vs. Medicare Advantage annually during open enrollment — your optimal choice can change as your health needs change.
- Use GoodRx or Cost Plus Drugs (Mark Cuban's pharmacy) for prescriptions — prices are often lower than your insurance copay.
- Get dental work done at dental schools — supervised care at 50-70% of private practice costs. Quality is often excellent.
- Maximize preventive care — every free Annual Wellness Visit, every covered screening, every immunization. Prevention is infinitely cheaper than treatment.
- If you're low-income, apply for Medicare Savings Programs and Extra Help (Part D subsidy) — millions of eligible people don't apply because they don't know these programs exist.
The $315,000 number is sobering but manageable when you plan for it. Budget $12,000-$20,000 per year per couple for total healthcare costs, invest specifically for healthcare expenses, and use every cost-reduction strategy available. The retirees who struggle aren't the ones who face high costs — they're the ones who didn't plan for them.