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GOBankingRates’ editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services – our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines<\/a> and our products and services review methodology<\/a>.<\/p>\n 20 Years<\/strong> Trusted by<\/strong> For many retirees, healthcare ends up being a major expense \u2014 but many underestimate just how much it will cost over the course of their retirement. Fidelity\u2019s annual Retiree Health Care Cost Estimate aims to give retirees a reasonable estimate of how much they should budget<\/a> for \u2014 and this year\u2019s figure is far over the six-figure mark.<\/p>\n Here\u2019s how much Fidelity estimates the average 2025 retiree will spend on medical expenses<\/a>.<\/p>\n 2025 Retirees Face $172K in Healthcare Costs, Fidelity Finds<\/p>\n Fidelity\u2019s 2025 Retiree Health Care Cost Estimate<\/a> found that a 65-year-old retiring this year can expect to spend an average of $172,500 on healthcare and medical expenses throughout their retirement. This marks a 4% increase from 2024 and continues the general upward trajectory of projected health-related retirement expenses since Fidelity\u2019s inaugural $80,000 estimate 23 years ago.<\/p>\n<\/p>\n \u201cThe steady climb in retirement healthcare costs has been consistent, so Fidelity\u2019s 2025 estimate doesn\u2019t come as too much of a surprise,\u201d said John Burns, VP and financial consultant at Fidelity. <\/p>\n These rising costs can be attributed to a number of factors, including longer lifespans<\/a> and inflation in the healthcare space that has outpaced overall inflation, he said. <\/p>\n \u201cAs Americans live well into their 80s and 90s, it\u2019s important to consider how these extra years of care can impact your essential expenses in retirement,\u201d Burns noted.<\/p>\n 1 in 5 Americans Haven\u2019t Planned for Retirement Healthcare<\/p>\n Even though healthcare costs are significant, 1 in 5 Americans said they\u2019ve never considered healthcare needs during retirement, Fidelity found. This represents a major gap in retirement planning<\/a>.<\/p>\n \u201cMedical expenses are among the most unpredictable costs many face in retirement, and oftentimes they are the most substantial as well,\u201d Burns said. \u201cBuilding this into your retirement income plan is essential because without considering healthcare, retirees face a significant risk of outliving their savings.\u201d <\/p>\n The sooner you start to consider how you\u2019ll cover these expenses, the more control you\u2019ll have over your retirement income strategy.<\/p>\n<\/p>\n How HSAs Can Help Cover Retirement Healthcare Costs<\/p>\n Health savings accounts (HSAs) can be used to cover healthcare costs both during your working years and in retirement. They\u2019re especially powerful because of their unique tax advantages.<\/p>\n \u201cMany think of HSAs as a spending account only, but investing your HSA dollars can make a big difference in the long run,\u201d Burns said. \u201cThe triple-tax advantage of HSAs means you can contribute pretax dollars to the account, invest them and any potential gains you see would be tax-free as well, assuming they\u2019re used to pay for qualified medical expenses.\u201d <\/p>\n<\/p>\n If you have the means to do so, your HSA can become a dedicated healthcare fund that can help cushion unexpected medical costs down the road in retirement.<\/p>\n Why Medicare Alone Won\u2019t Cover All Retirement Health Costs<\/p>\n![\"\"](\"https:\/\/cdn.gobankingrates.com\/wp-content\/uploads\/2023\/11\/icon-20.svg?webp=1&quality=75\"){kind=icon}
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