Fidelity estimates a 65-year-old couple retiring in 2026 will need approximately $315,000 for healthcare costs in retirement — and this estimate frequently surprises retirees who underestimated the expense.
Healthcare before Medicare (55–65)
Early retirees face the most expensive healthcare decade. ACA marketplace insurance for a 60-year-old: $800–$1,400/month (before subsidies). Income-based subsidies can dramatically reduce this for people who manage their income carefully. A FIRE retiree with $75,000/year in spending can structure income to receive significant premium tax credits.
Medicare: what it actually covers (and doesn't)
| Medicare component | Coverage | 2026 premium |
|---|---|---|
| Part A (hospital) | Hospital stays, skilled nursing (limited) | $0 (if 40+ quarters worked) |
| Part B (medical) | Doctor visits, outpatient, preventive | $185.00/month |
| Part D (prescription) | Prescription drugs | $40–$100/month |
| Medigap / Supplement | Fills Medicare gaps | $100–$300/month |
| NOT covered | Dental, vision, hearing, long-term care | Out of pocket |
Long-term care: the largest uninsured risk
70% of Americans turning 65 will need some form of long-term care. Average nursing home cost in 2026: $110,000/year. Average home health aide: $65,000/year. Medicare covers very limited skilled nursing care. Medicaid covers it — but only after spending down nearly all assets. Planning options: LTC insurance (buy at 55–60), hybrid life/LTC policy, or a "self-insure" LTC reserve.
The HSA as healthcare reserve
Maxing an HSA ($4,300/year individual, $8,550 family) for 20 years, invested at 7%, creates a $176,000–$370,000 healthcare fund that can be withdrawn tax-free for any medical expense. This is the most tax-efficient retirement healthcare reserve available.
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