Fidelity: Retiree healthcare costs rise 7.5% for 2026

Fidelity Investments projects lifetime healthcare costs for a 65-year-old retiring in 2026 will increase 7.5%, to $185,500 for individuals and $371,000 for couples. The firm released the estimate on Tuesday and said the figures exclude long-term care.

The 7.5% increase follows a 5% rise last year and a 4% increase in 2024. Marlon Deleon, a financial consultant at Fidelity, said: “The $185,500 figure isn’t meant to suggest people need to figure out a way to get that money right away, but it does reinforce the importance of incorporating healthcare costs into a retirement income plan.”

An analysis of Bureau of Labor Statistics data by the AARP Public Policy Institute showed home health costs rose 7.9% in the 12 months ended May 31, while nursing home costs increased 4.6% over the same period. Fidelity noted that long-term care can add hundreds of thousands of dollars to lifetime expenses for people who require extended home care or nursing facility care.

Household finances are affecting the ability to save for care. A Schroders U.S. Retirement survey found about one-third of workplace retirement plan participants had more credit-card debt than retirement savings. A West Health–Gallup Center survey reported that 47% of adults earning $90,000 to less than $120,000 a year made at least one daily tradeoff to pay for healthcare, and 11% of households earning $240,000 or more reported making tradeoffs. The most common adjustment among insured adults was delaying a prescription (14%), and 32% of uninsured adults said they borrowed money to pay for healthcare expenses.

Employers are also responding to higher medical costs. A Mercer study of chief financial officers and finance leaders found one-third ranked healthcare benefit costs among their top three operating expense concerns. A separate Mercer survey found nearly half of large U.S. employers plan changes to medical plans in 2027 that are likely to raise deductibles or co-pays, increasing out-of-pocket costs for workers.

National health spending reached $5.3 trillion in 2024, about 18% of gross domestic product, and actuaries at the Centers for Medicare and Medicaid Services project spending could approach $9 trillion, or 20.6% of GDP, by 2034. Demographic data show adults 65 and older now make up about half of the population over 50, and the 75-and-older age group is the fastest-growing segment, increasing demand for medical and long-term care services.

Fidelity said the estimate is intended to help retirees plan for healthcare costs in retirement and that it should be incorporated into retirement income calculations.