When most of us think about retirement planning, we think about contributing to our 401(k) or 403(b), choosing the right investment mix, and figuring out when to start Social Security. Healthcare costs often get left out of the conversation entirely, or treated as an afterthought. That's worth fixing. For many retirees, healthcare ends up being one of the largest expenses they'll face, and it's also one of the most misunderstood. The good news: a little planning now can save you a lot of stress later, and you don't need to be a healthcare expert to get started.

Why Healthcare Costs Deserve Their Own Plan

Healthcare in retirement isn't just "whatever Medicare covers." Premiums, deductibles, copays, dental and vision care, and the possibility of long-term care can add up to a substantial portion of your retirement budget. Costs also tend to rise faster than general inflation, which means the number you have in mind today may not be the number you'll actually need.

To put a real number on it: Fidelity's most recent Retiree Health Care Cost Estimate found that a 65-year-old retiring today should expect to spend roughly $172,500 on healthcare over the course of retirement, or about $345,000 for a couple, and that figure doesn't even include long-term care. For context, that estimate has more than doubled since Fidelity began tracking it in 2002, when it stood at around $80,000. It's a big number, but the point isn't to alarm you, it's to make the planning feel concrete rather than abstract.

The goal isn't to scare you. It's to help you build healthcare into your overall retirement plan the same way you'd plan for housing or travel, so it doesn't catch you off guard.

Medicare 101: The Basics You Need

Medicare is the foundation of healthcare coverage for most people starting at age 65, but it doesn't cover everything, and timing matters.

Part A (hospital insurance) is usually premium-free if you or your spouse paid Medicare taxes for at least 10 years. It covers inpatient hospital stays, skilled nursing facility care, and some home health care.

Part B (medical insurance) covers doctor visits, outpatient care, and preventive services, but it comes with a monthly premium. For 2026, the standard Part B premium is $202.90 per month, with an annual deductible of $283. Higher earners pay more through something called IRMAA (Income-Related Monthly Adjustment Amount), which is based on your tax return from two years prior; in 2026, the surcharge kicks in once income exceeds $109,000 for single filers or $218,000 for joint filers, and total monthly Part B premiums for higher earners can range from roughly $284 up to $690, depending on income. This is worth knowing if you're planning a high-income year close to retirement, such as a large Roth conversion, since the income from that year can bump up your premiums two years down the road.

Part C (Medicare Advantage) is an alternative to traditional Medicare offered through private insurers, often bundling in extra benefits like dental or vision.

Part D (prescription drug coverage) helps with medication costs and, like Part B, can carry an income-based surcharge.

One detail that trips people up: if you're still working past 65 and have employer coverage, you may be able to delay enrolling in Medicare without penalty, but only under certain conditions. If you miss your enrollment window without qualifying coverage, you could face permanent late-enrollment penalties. If you're approaching 65, it's worth checking your specific situation well before your birthday.

The Gap Years: Retiring Before 65

If you're hoping to retire before age 65, healthcare is one of the biggest financial puzzles to solve, since Medicare eligibility doesn't start until then. Options typically include COBRA continuation coverage, a marketplace plan, a spouse's employer plan, or in some cases retiree coverage offered by your employer. Each comes with different costs and trade-offs, so it's worth mapping this out years in advance rather than scrambling as your retirement date approaches.

Don't Overlook the HSA

If you have access to a Health Savings Account through a high-deductible health plan, it may be one of the most powerful tools available to you for retirement healthcare planning. HSAs offer a rare triple tax advantage: contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are tax-free too. Unlike a Flexible Spending Account, HSA balances roll over year to year and stay with you even after you change jobs or retire.

Many people use their HSA as a pass-through account, contributing and then immediately spending on current medical costs. But if your budget allows, consider paying current medical expenses out of pocket and letting your HSA balance grow. Over time, it can become a dedicated fund for healthcare costs in retirement, including Medicare premiums (though not supplemental Medigap premiums).

The Long-Term Care Question

Long-term care, whether that's an in-home aide, assisted living, or a nursing facility, is one of the most expensive and least planned-for parts of retirement. Here's an important distinction: Medicare generally does not cover long-term custodial care. It covers short-term skilled nursing after a hospital stay, but not the ongoing help with daily activities that many people eventually need.

There's no one-size-fits-all answer for how to prepare. Some people choose long-term care insurance, which can be expensive and varies widely in coverage. Others self-insure by setting aside dedicated savings. Some look at hybrid life insurance or annuity products with long-term care riders. The right approach depends on your health, family history, assets, and how much risk you're comfortable carrying yourself. The earlier you start thinking about it, the more options you'll have, since long-term care insurance becomes harder and more expensive to get as you age or if your health changes.

Practical Steps You Can Take Now

A few things are worth doing regardless of how far away retirement feels:

First, estimate your future healthcare costs realistically rather than guessing. There are online tools and calculators that can give you a ballpark figure based on your age, health, and where you plan to retire.

Second, if you have an HSA, contribute consistently and consider letting it grow rather than spending it down each year.

Third, talk to your benefits team or financial advisor about how your specific retirement plan, pension, or employer benefits interact with Medicare. Some employers offer retiree health benefits or Medicare supplement subsidies that can change your math significantly.

Fourth, build a rough long-term care plan, even a simple one. Knowing your general approach, whether that's insurance, savings, or family support, removes a lot of uncertainty.

Finally, revisit your plan periodically. Healthcare policy, your income, and your health all change over time, so this isn't a one-and-done exercise.

The Bottom Line

Healthcare costs in retirement are significant, but they're also plannable. You don't need to have every detail figured out today, and you certainly don't need to become a Medicare expert overnight. What matters is starting the conversation early, understanding the basic building blocks like Medicare and HSAs, and thinking honestly about long-term care before you're in a position where you need it urgently.

If you're not sure where to start, that's completely normal, and it's exactly what your retirement plan's resources are there for. Take a look at the educational tools available through your plan, sit in on a benefits webinar if one's offered, or reach out to schedule time with a plan advisor to talk through your specific situation. A short conversation now can make a real difference in how prepared you feel later.

Scott Higgins | AIF ®, CFP®, CPFA®, NSSA®

Financial Advisor

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