‘New Retirement Reality’ Starting To Sink In for Millions, and It's Sobering
Markets swing, rates climb, and inflation fills the headlines. For millions of Americans, though, the most pressing question is more personal: what retirement will actually look like. In 2025 alone, a record 4.2 million people turned 65, according to the Minneapolis Federal Reserve, and each one is facing that question now.
Longer lives are stretching retirement past three decades, while the rising cost of senior healthcare grows harder to ignore. Many retirees are caught between two fears: outliving their savings, and not being well enough to enjoy the years they worked so hard to reach.
Take the First Step: Costco Expands Into Medicare Coverage? 3-State Rollout in the Works
Keep Learning: 6 Clever Ways Retirees Are Earning Up to $1K Per Month From Home
The 6-Figure Expense That Virtually No One Can Avoid
According to Fidelity, those who turned 65 in 2025 will spend an average of $185,500 on health care costs during the remainder of their lives. That’s a 7.5% increase over 2025 alone, but staying well has been costing seniors more each year for a quarter-century.
The study is in its 25th year, and while the original report isn’t archived online, Fidelity confirmed in 2023 that the debut analysis reported the average lifetime cost of healthcare in retirement was $80,000 per individual in 2002. That’s a 132% increase between 2002 and 2026. For context, calculators based on Bureau of Labor Statistics data show that overall prices rose by only 85.61% over the same 25-year period.
In short, if you think inflation is bad at the grocery store, wait until you get a taste of health care in retirement.
Where Does It All Go?
Some of the most common expenses, such as insurance coverage, will be ongoing. Other costs will be unexpected and sporadic, such as extended illnesses, injuries and other emergencies.
Here’s the average breakdown from Fidelity:
10%: Prescription drugs
43%: Medicare Part B and D premiums
47%: Other medical expenses, including hospital and doctor’s office deductibles, co-insurance and co-payments
There Are Many Variables — Control the Ones You Can
The averages found in the annual Fidelity study over the last 25 years are based on a broad range of contributing factors, including taxes, location, age and timeline, income, region, and, of course, the retiree's health. Many of those variables are beyond any individual's control, but your choices can influence several of the most common and costly.
Choose Your Date With Health Coverage in Mind
Medicare enrollment starts at 65. If you retire before that, you’re responsible for your own health insurance, regardless of whether you claim Social Security benefits, which can begin as early as age 62. If you’re not covered by an employer’s plan or that of an eligible spouse, you’re stuck with the pricier options of COBRA continuation, ACA marketplace plans or private insurance.
Reduce Your MAGI a Year or 2 Early
If you have the cash reserves and workplace flexibility to do so, scaling back the hours you work and the income you earn before Medicare eligibility can lower your monthly Part B (outpatient medical insurance) and Part D (prescription drugs) payments, potentially by hundreds per month.
The Social Security Administration (SSA) charges higher premiums to higher earners, based on their modified adjusted gross income (MAGI) from the two previous working years.
Enroll in Medicare on Time
The six-month window of Medicare’s Initial Enrollment Period — three months before and after you turn 65 — is among the most consequential times for any retiree. If you miss the window and you don’t qualify for a special enrollment period, you’ll pay late enrollment penalties, which can increase some premiums for life.
Cover the Gap
Many retirees buy additional gap insurance to cover expenses such as deductibles and copays in Original Medicare (Parts A and B). Kiplinger notes that while large majorities of policyholders are satisfied with their Medigap or Medicare Advantage plans, determining the right policy and the right amount of coverage can be a confusing, frustrating and expensive experience — and one that can have years-long ramifications.
Plan for Social Security
According to Merril, healthy retirees typically spend 70% of their lifetime Social Security benefit on health care. Those who wait until their full retirement age secure the entire payment and earn credits for delaying, which boost their checks for life. Those who claim early get a permanently reduced benefit — and benefit payments increase your MAGI and, potentially, the cost of Medicare.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
More From MoneyLion: