Healthcare costs have been steadily increasing over the past years, and 2025 is no different.
Research shared today by Fidelity Investments’ Retiree Health Care Cost Estimate finds that an average 65-year-old couple today will spend upwards of $172,500 on healthcare costs in retirement, representing a 4% increase compared to last year in an overall rising trajectory since Fidelity’s inaugural $80,000 estimate in 2002.
Health care costs continue to mount as Americans’ confidence in their retirement slightly decrease, and as more admit to not preparing for healthcare spending in their later years. One-in-five Americans say they’ve never considered healthcare needs during retirement and 17% have not taken any action in planning for healthcare expenses during this point.
“Year after year, so many Americans underestimate how much they’ll need to save to cover healthcare costs in retirement,” said Shams Talib, head of Fidelity Workplace Consulting. “We recognize the impact healthcare costs can have on retirement savings. With the right tools and guidance, pre-retirees and retirees alike can take greater control of their financial futures by beginning the planning process as soon as possible.”
HSA adoption rises, but education wanes
While healthcare costs in retirement continue to rise, more employers are offering tax-advantaged options that can later support healthcare spending. Health savings accounts (HSAs) offered by Fidelity saw a 43% growth in total assets and a 23% increase in accounts in 2024.
Still, Fidelity’s research finds that just 23% of Americans are contributing to an HSA to prepare for healthcare costs in retirement, and only three-in-10 are investing their HSA assets.
Pre-retirees could benefit from HSA education, Fidelity notes, as only 15% of those ages 55 to 64 are enrolled in a health savings account. Among them, over half (52%) do not know that an HSA could be utilized as a retirement savings vehicle.
“Our research consistently shows HSA users feel more prepared to cover health care expenses in retirement, yet many people don’t realize the full potential of the account. When used as a part of a well-crafted retirement plan, the tax-advantaged nature of your HSA savings can offer growth potential that can help reduce the burden of health care in retirement,” said Steve Betts, head of Fidelity Health.
Older Americans approaching retirement should also have a basic understanding of Medicare, their eligibility requirements, and what the health insurance program can help pay for, Fidelity’s research advises. While 37% of of respondents expect that Medicare will cover healthcare costs in retirement, Fidelity adds that many are unaware of the extra costs they’ll be responsible for, including Medicare premiums, over-the-counter medications, dental and vision care, and long-term care.
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Healthcare Costs in Retirement Likely to Far Exceed Americans’ Expectations