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- Planning to retire? You may be facing a $172,500 health care bill. Here's what's behind the sky-high expense</p>
<p>Monique DanaoAugust 17, 2025 at 7:15 AM</p>
<p>An estimated 4% increase in health care coverage may have you putting your retirement plans on hold.</p>
<p>If you're turning 65 and planning to retire in 2025, you may need to set aside more cash for medical costs than you expected.</p>
<p>A new report from Fidelity Investments finds that the average 65-year-old retiree will need $172,500 to cover health care and medical expenses throughout retirement. That's up 4% from last year's estimate and more than double the $80,000 projected when Fidelity first began tracking these costs in 2002.</p>
<p>"It's not just a benchmark for retirement readiness but also underscores the importance of planning as early as possible," Chandler Riggs, Vice President at Fidelity Investments, told FOX Business.</p>
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<p>What Fidelity's number covers — and what it doesn't</p>
<p>The estimate assumes retirees enroll in Medicare Parts A and B and Medicare Part D, factoring in premiums, co-payments and out-of-pocket costs for medical care and prescription drugs.</p>
<p>But it doesn't include long-term care — one of the biggest potential expenses for retirees — or dental, vision and over-the-counter medications. Medicare Advantage plans can offset some of these costs, but they require separate monthly premiums.</p>
<p>Riggs says the surge in costs is driven by several factors, including longer life expectancies and a health care inflation rate that has outpaced general inflation for years.</p>
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<p>A wake-up call for unprepared retirees</p>
<p>Fidelity's survey revealed that 17% of respondents have taken no action to prepare for medical expenses in retirement. One in five have never factored those costs into their retirement planning. Among Gen X respondents, that rises to about one in four.</p>
<p>Matthew Gregory, planning director at The Bahnsen Group, told FOX Business that many people have a "hands-off" mindset when it comes to health care costs during their working years because employer-sponsored plans automatically deduct premiums.</p>
<p>"They may not be thinking about the need for supplemental coverage on top of Parts A and B of Medicare, as well as the fact that Medicare does not cover most long-term care costs," Gregory said. "Those expenses can snowball quickly and become a reality check."</p>
<p>That reality check could force near-retirees to reconsider whether they've saved enough or if they need to push back their retirement date to keep employer-sponsored health benefits.</p>
<p>How to build a health care nest egg</p>
<p>Riggs recommends starting early and using tax-advantaged accounts to prepare.</p>
<p>One of the most effective tools is a health savings account (HSA), which offers a triple tax advantage: Contributions are tax-deductible, investment growth is tax-free and withdrawals for qualified medical expenses are also tax-free.</p>
<p>For those close to retirement, working a few more years could allow them to keep employer coverage, max out their HSA contributions and build up extra savings.</p>
<p>"The triple-tax advantage of HSAs makes them a versatile tool to save and pay for health expenses. The contributions are tax-deductible, and the HSA dollars can be spent tax-free when used for qualified medical expenses." Riggs said.</p>
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<p>This article provides information only and should not be construed as advice. It is provided without warranty of any kind.</p>
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