Fidelity estimates a 65-year-old couple retiring in 2026 will need approximately $315,000 for healthcare costs in retirement — and this estimate frequently surprises retirees who underestimated the expense.
Healthcare before Medicare (55–65)
Early retirees face the most expensive healthcare decade. ACA marketplace insurance for a 60-year-old: $800–$1,400/month (before subsidies). Income-based subsidies can dramatically reduce this for people who manage their income carefully. A FIRE retiree with $75,000/year in spending can structure income to receive significant premium tax credits.
Medicare: what it actually covers (and doesn't)
| Medicare component | Coverage | 2026 premium |
|---|---|---|
| Part A (hospital) | Hospital stays, skilled nursing (limited) | $0 (if 40+ quarters worked) |
| Part B (medical) | Doctor visits, outpatient, preventive | $185.00/month |
| Part D (prescription) | Prescription drugs | $40–$100/month |
| Medigap / Supplement | Fills Medicare gaps | $100–$300/month |
| NOT covered | Dental, vision, hearing, long-term care | Out of pocket |
Long-term care: the largest uninsured risk
70% of Americans turning 65 will need some form of long-term care. Average nursing home cost in 2026: $110,000/year. Average home health aide: $65,000/year. Medicare covers very limited skilled nursing care. Medicaid covers it — but only after spending down nearly all assets. Planning options: LTC insurance (buy at 55–60), hybrid life/LTC policy, or a "self-insure" LTC reserve.
The HSA as healthcare reserve
Maxing an HSA ($4,300/year individual, $8,550 family) for 20 years, invested at 7%, creates a $176,000–$370,000 healthcare fund that can be withdrawn tax-free for any medical expense. This is the most tax-efficient retirement healthcare reserve available.
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About the author
Enrique 'Kike' Faúndez is an Information Systems and Management Control Engineer from Universidad de Chile, with master’s degrees in Finance from Universidad de Chile and Industrial Engineering from Pontificia Universidad Católica de Chile. He has 15+ years of experience in regulated financial services across finance, operations, and digital product development. He founded CashControlly in Santiago, Chile, with the conviction that personal financial control should not be a privilege, but an accessible and well-designed tool.
- Master's in Finance, Universidad de Chile
- Master's in Industrial Engineering, Pontificia Universidad Católica de Chile
- Information Systems and Management Control Engineer, Universidad de Chile
- AI and ITIL certifications
- 15+ years in regulated financial services
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