Health Care Costs in Retirement Keep Rising

Sep 18, 2025

​Health Care Costs in Retirement Keep Rising — Here’s What You Should Know

Planning for retirement isn’t just about making sure you have enough money for everyday living. Health care is one of the biggest (and most overlooked) expenses you’ll face later in life — even if you’re on Medicare.

An Investopedia article by Elizabeth Guevara (July 31, 2025) reports that the average 65-year-old retiring this year will spend around $172,500 on medical expenses over the course of retirement. That includes Medicare premiums, co-pays, prescriptions, over-the-counter medications, plus dental and vision care — things Medicare doesn’t fully cover.

And those costs are climbing. Fidelity says that’s a 4% jump from last year, and government data shows medical costs overall have gone up more than 30% in the past 10 years.

The surprising part? A lot of Americans still aren’t preparing for this. Fidelity’s survey found:

  • 1 in 5 people never thought about health care costs when planning for retirement.

  • 17% haven’t taken any steps to prepare for rising medical bills.

As Fidelity’s Shams Talib put it, too many people underestimate what they’ll need — but starting early can make a huge difference.

One option to help is a Health Savings Account (HSA). These accounts let you save money tax-free for medical expenses, and they’ve become more popular (Fidelity saw a 23% increase in HSA accounts last year). Still, most people aren’t using them. Less than a quarter of Americans contribute to an HSA, and more than half of people near retirement don’t even realize they can use HSAs for future medical costs.

Bottom line: Health care will be one of your biggest expenses in retirement, but the earlier you plan — whether that’s saving extra or opening an HSA — the better prepared you’ll be.

Sources:

  • Elizabeth Guevara, Investopedia — “Health Costs In Retirement Are Rising, And Many Americans Aren’t Prepared” (July 31, 2025)

  • Fidelity Investments — 2025 Retiree Health Care Cost Estimate

  • Federal Reserve Bank of St. Louis — Consumer Price Index: Medical Care