You've probably spent years thinking about how much you need to save for retirement. You've run the numbers, built the plan, and watched the accounts grow. But there's one category of spending that consistently surprises retirees more than any other: healthcare.
Not because people ignore it entirely, but because the full picture is almost always bigger and more complex than they expected. A 65-year-old couple retiring today can expect to spend somewhere in the range of $330,000 to $400,000 on healthcare expenses over the course of their retirement. That figure doesn't include long-term care or the fact that healthcare costs have historically risen faster than general inflation.
The goal here isn't to alarm you. It's to make sure this part of your retirement picture gets the same deliberate attention you've given everything else.
The Medicare Gap People Miss
Medicare is the foundation of most retirees' healthcare coverage, and it works well for a lot of things. But it's not free, and it's not comprehensive. Most people know about premiums, but the out-of-pocket exposure goes well beyond that.
Medicare Part B, which covers outpatient care and doctor visits, carries a standard premium of $202.90 per month in 2026. Part D, which covers prescription drugs, adds more. And that's before you factor in deductibles, copays, and the costs of services Medicare doesn't cover at all, including dental, vision, and hearing care. These gaps are real, and for many retirees they represent thousands of dollars a year in unplanned spending.
There's also the income factor. Higher earners face an IRMAA surcharge that can significantly increase their Medicare premiums. A married couple with a modified adjusted gross income above $218,000 pays more than the standard rate, sometimes substantially more. If you've had a large Roth conversion, sold an investment property, or taken a sizable RMD, your Medicare costs two years later could be higher than you anticipate.
Supplemental coverage like Medigap or Medicare Advantage can fill some of these gaps, but each option comes with its own tradeoffs around network flexibility, premiums, and out-of-pocket maximums. Understanding which structure fits your situation is worth a real conversation, not just a quick online comparison.
Long-Term Care: The Cost Most Plans Don't Include
This is where retirement healthcare planning gets genuinely difficult. Long-term care refers to the ongoing assistance people need when they can no longer manage daily activities on their own, things like bathing, dressing, eating, or moving around safely. It can come in many forms: in-home care, assisted living, memory care, or a skilled nursing facility.
The numbers are significant. According to the latest CareScout Cost of Care Survey, the national median cost for a private room in a nursing facility now runs $355 per day, or roughly $129,575 annually. Assisted living comes in at a median of $6,200 per month. Non-medical home caregiver services average $35 per hour. A two-to-three-year need for care at any of these levels represents a major financial event, one that Medicare does not cover beyond a limited short-term window following a qualifying hospital stay.
Medicaid does cover long-term care, but only after you've spent down most of your own assets to qualify. For retirees who've saved diligently and want to preserve something for their families or their legacy, relying on Medicaid as a long-term care strategy has real consequences.
There are several ways to address long-term care risk depending on your situation:
- Traditional long-term care insurance has become more expensive and harder to obtain as people age, but it remains a meaningful option for those who qualify and purchase coverage earlier, ideally in their 50s or early 60s.
- Hybrid life insurance and annuity products with long-term care riders have become increasingly popular because they provide a benefit whether or not care is ever needed, addressing the concern that traditional LTC insurance premiums feel "wasted" if you stay healthy.
- Self-funding is a legitimate strategy for retirees with significant assets, but it requires intentionally ring-fencing resources for this purpose and resisting the temptation to use those funds for other things.
Build Healthcare Into Your Income Plan
One of the most useful shifts in how people think about retirement healthcare is treating it as its own budget line, not an afterthought lumped into "general expenses." When healthcare costs are invisible inside a broader spending number, it's easy to underestimate them and harder to adjust when they change.
A few practical considerations worth building into any retirement income strategy:
- Plan for healthcare inflation specifically. Medical costs have grown at roughly 5 to 6 percent annually in recent years, which is meaningfully higher than the broader CPI. A retirement income plan that doesn't account for this will start to show stress over time.
- Consider a Health Savings Account (HSA) if you're still eligible. If you're still working and enrolled in a high-deductible health plan, maxing out your HSA contributions in the years before retirement creates a triple tax-advantaged pool of money specifically for healthcare costs. In 2026, the contribution limit is $4,400 for self-only coverage and $8,750 for families.
- Factor in the "go-go, slow-go, no-go" phases. Healthcare spending in early retirement often looks manageable. It tends to accelerate significantly in later years when chronic conditions and care needs increase. A plan that's built around early-retirement spending can run into trouble in the later chapters.
Why This Conversation Can't Wait
The earlier you address healthcare planning, the more options you have. Long-term care insurance is far easier to obtain and afford at 55 than at 68. HSA balances need years to grow. Medicare supplemental decisions have enrollment windows that, if missed, can result in permanent premium penalties or limited coverage options.
More broadly, healthcare costs that aren't planned for have a way of disrupting everything else in a retirement strategy. A major care event late in life can deplete assets that were intended to generate income, support a surviving spouse, or pass on to the next generation. Building a thoughtful plan now is one of the most direct ways to protect the work you've already done.
If you haven't looked at your healthcare cost projections as part of your broader retirement income plan, that's a gap worth closing. We're here to work through the numbers with you, think through coverage options, and make sure this piece of your plan is as solid as everything else you've built.
Wishing you a confident and clear-eyed month ahead.
Warm regards,
Will Johnson
Tailwinds Wealth