Healthcare is often a retiree's largest non-housing expense. Enter your current annual cost, an inflation rate, and your years in retirement to project the lifetime total to plan for.
Sample input: Current annual healthcare cost ($): 7000, Healthcare inflation rate (%): 5, Years in retirement: 25
Projected lifetime healthcare cost: 334090 (A significant retirement expense)
Starting at $7,000 a year and growing 5% annually, healthcare could cost about $334,090 over 25 years of retirement. Healthcare is often a retiree's largest non-housing expense, so plan and save for it early (an HSA is ideal).
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Estimates vary, but widely cited studies such as Fidelity's annual Retiree Health Care Cost Estimate put a 65-year-old couple's lifetime cost in the low-to-mid six figures. Figures change every year, so check the current year's estimate rather than relying on an old number.
No. Medicare has premiums, deductibles, and coinsurance, and it does not cover most dental, vision, hearing, or long-term custodial care. Many retirees add a Medigap or Medicare Advantage plan and still pay meaningful out-of-pocket costs; see medicare.gov for current details.
A Health Savings Account is the most tax-efficient option: contributions are pre-tax, growth is tax-free, and withdrawals for qualified medical costs are tax-free at any age (IRS Publication 969). Investing the HSA rather than spending it builds a dedicated, tax-free healthcare fund.
Healthcare costs have historically risen faster than general inflation, so projecting at a higher rate gives a more realistic target. This tool compounds your current annual cost at the rate you choose across your retirement years.