Retirees Could Need $185,500 For This One Expense, A 2026 Estimate Finds

Direct working income may end in retirement, but as many already know, the costs usually don't follow suit. From transportation to food and housing, there's a lot to spend money on during the golden years. As retirees grow older, healthcare can become one of their biggest expenses. Fidelity estimates that a 65-year-old retiring in 2026 may need $185,500 in after-tax savings to cover healthcare expenses throughout retirement, assuming traditional Medicare coverage. And that figure also excludes certain expenses, including long-term care, most dental services, and over-the-counter medications.

Meanwhile, a 2025 report from the Transamerica Center for Retirement Studies found that retired households had median savings of $126,000, excluding home equity, in late 2024. The report also found that 12% of retirees surveyed had no savings. This shows the scale of the potential burden on American retirees, as those savings may also need to supplement Social Security or pension income to cover food, housing, and other everyday expenses.

The worrying part is that healthcare costs seem to be on a steady rise. Fidelity's 2026 figure is $13,000, or about 7.5%, higher than its $172,500 estimate for 2025 and about 12.4% above the $165,000 it projected in 2024. This trend suggests that people still saving for retirement should leave room for healthcare costs to rise further — thus avoiding one of the common retirement regrets. As for why this is happening, Fidelity attributes the 2026 increase primarily to rising healthcare prices, greater use of medical services, and higher costs associated with managing chronic conditions.

Fidelity's estimate assumes the retiree is enrolled in Original Medicare Parts A and B, along with Part D prescription drug coverage. The premiums for Parts B and D alone account for 45% of the estimated lifetime healthcare spending, or roughly $83,500. And these are just payments to maintain coverage, separate from the bills retirees may pay when receiving care.

The largest share of the estimate is the 48% assigned to other medical expenses, or roughly $89,000 through retirement. This category includes deductibles, copayments, and coinsurance associated with hospital stays, outpatient services, and other medical care. Fidelity also includes some medical costs Medicare won't cover, such as routine vision and hearing exams, in this category.

The remaining 7%, or roughly $13,000 throughout retirement, goes toward out-of-pocket prescription drug expenses. This generally includes copayments and costs Part D doesn't cover for brand-name, generic, and specialty medicines. Spread across a hypothetical 20-year retirement, that amount would average $650 annually, or about $54 monthly. However, Medicare's out-of-pocket cap for covered Part D drugs was $2,100 in 2026 and will jump nearly 14% to $2,400 in 2027. That means even a single year hitting the cap would equal about three to four years of the illustrative $650 average. Actual prescription drug spending can vary considerably depending on a retiree's medications, coverage, and medical needs.