You Have a Retirement Plan. It’s Missing $345,000.

Most retirement planning conversations focus on two numbers: how much you’ve saved, and what you’ll need each month. The third number — healthcare costs in retirement — quietly hollows out both of those, and it almost never comes up until it’s too late to do much about it.

Fidelity’s 2025 Retiree Health Care Cost Estimate puts the average out-of-pocket healthcare cost for a 65-year-old couple at $345,000 over the course of retirement. Not per year. Total. And that number excludes long-term care — nursing homes, assisted living, home health aides — which are separately the most expensive healthcare costs most retirees will face.

One in five Americans say they have never considered healthcare costs when planning for retirement. One in four Gen X-ers say the same. That gap between what people plan for and what they actually face is where retirement plans break down — quietly, years after the decisions that could have changed it were made.

Why Healthcare Costs in Retirement Are So Easy to Miss

Medicare Part A covers inpatient hospital care, skilled nursing facilities after a qualifying hospital stay, and some home health services. Part B covers outpatient care, preventive services, and physician visits. What neither covers: dental, vision, hearing, most long-term care, and the steady accumulation of copays, deductibles, and coinsurance on everything it does cover.

The 2026 Medicare Part B standard premium is $185 per month per person — $4,440 per year for a couple before a single appointment. The Part B deductible is $257. Medicare Supplement (Medigap) plans that fill coverage gaps run an additional $100–$400 per month per person depending on plan and enrollment age. The full picture of premiums, deductibles, and coinsurance is laid out at Medicare.gov, and it’s worth twenty minutes of your time well before you’re 64.

One fork in the road deserves more thought than it usually gets: original Medicare with a Medigap supplement versus a Medicare Advantage plan. Advantage plans advertise low or zero premiums and often bundle dental and vision, which makes them look like the obvious choice. The tradeoff is networks, prior authorization requirements, and plan rules that matter most precisely when you’re sickest. Original Medicare plus Medigap costs more every month and buys you the freedom to see nearly any doctor in the country without asking permission. Neither is wrong — but the choice is stickier than it looks, because switching from Advantage back to Medigap later usually means passing medical underwriting. Decide like it’s permanent.

This is the baseline for two reasonably healthy people managing normal aging. Add a chronic condition, a major surgery, or cognitive decline and the numbers move significantly higher.

The Enrollment Windows That Cost You Forever

Medicare has deadlines with permanent consequences, and they’re the part of this system that punishes people who simply didn’t know.

Miss your Part B enrollment window without qualifying employer coverage, and your premium goes up 10% for every 12-month period you were late — not as a one-time penalty, but for the rest of your life. Someone who enrolls three years late pays 30% extra on every premium payment until they die. The same trap exists for Part D drug coverage, with its own permanent late penalty.

The Medigap window is even less forgiving. You get a six-month open enrollment period starting when you’re 65 and enrolled in Part B, during which insurers must sell you any policy regardless of your health. Miss that window, and in most states they can decline you or price the policy on your medical history — which means the people who most need supplemental coverage can find themselves unable to buy it at any reasonable price.

And then there’s IRMAA, the surcharge almost nobody learns about until the letter arrives. If your modified adjusted gross income exceeds certain thresholds, you pay more — sometimes dramatically more — for Parts B and D. The catch: it’s calculated on your tax return from two years earlier. A large Roth conversion or capital gain at 63 raises your Medicare premiums at 65. If conversions are part of your plan — and for many people they should be — the sequencing relative to that two-year lookback belongs in the spreadsheet.

The Long-Term Care Cost Nobody Puts in the Spreadsheet

The expense that derails retirement plans most completely is long-term care — and it’s entirely excluded from Fidelity’s $345,000 estimate. A private nursing home room in the US now costs a median of $129,575 annually, according to 2025 data from TheStreet’s analysis of long-term care costs. Assisted living averages approximately $74,400 per year at the national median. Home health aides run roughly $30 per hour for daily care.

Medicare pays for skilled nursing facility care for a limited period following a qualifying hospital stay. It does not pay for custodial long-term care — assistance with bathing, dressing, eating, and mobility. That gap falls on Medicaid (only after assets have been spent down to eligibility levels), long-term care insurance, or out-of-pocket from retirement savings.

The US Department of Health and Human Services estimates the probability of needing some form of long-term care after age 65 at approximately 70%. This is the base case, not a tail risk.

Turn the HSA Into a Stealth Retirement Account

If you have access to a Health Savings Account through a high-deductible health plan, it is the single most tax-advantaged account in the US code — and most people use it wrong.

The 2026 HSA contribution limits are $4,300 for individuals and $8,550 for families, with an extra $1,000 catch-up at 55. Contributions are pre-tax, growth is tax-free, and qualified medical withdrawals are tax-free — the triple tax advantage no 401(k) or Roth IRA can match. After 65, withdrawals for any purpose are taxed as ordinary income with no penalty, making the HSA function as a secondary traditional IRA with a healthcare bonus on top. The IRS rules live in Publication 969.

The wrong way to use it: treat it as a checking account for this year’s copays. The right way, if your cash flow allows: max the contribution, invest the balance instead of leaving it in cash, pay current medical expenses out of pocket, and save every receipt. There’s no deadline on reimbursing yourself — a receipt from 2026 can justify a tax-free withdrawal in 2046, after the money spent twenty years compounding. Run that way for fifteen or twenty years and the HSA becomes exactly the dedicated healthcare bucket the $345,000 problem demands. I’ve written a full breakdown of the HSA investment strategy and how to set it up.

Here’s what the math looks like in practice. A couple that starts at 45, maxes the family HSA at $8,550 a year, invests it, and never touches it has contributed $171,000 by 65. At a 7% average return, the balance is roughly $350,000 — almost exactly Fidelity’s $345,000 estimate. Read that again: the scariest number in retirement planning fully funds itself with one account, started at 45, on autopilot. Start at 55 instead and the same strategy produces about $118,000 — still meaningful, but the decade you waited cost you two-thirds of the outcome. This is the rare retirement problem with a clean, mechanical solution, and the only input that really matters is when you start.

How to Plan for Healthcare Costs in Retirement Before 65

Three actions have the most impact for people still a decade or more from retirement.

Max the HSA and invest it, as above — it’s the only account purpose-built for this exact liability.

Evaluate long-term care coverage before age 60, when premiums are meaningfully lower and qualifying is more reliable. Hybrid policies combining life insurance with long-term care benefits have largely replaced traditional standalone LTC policies, which had a use-it-or-lose-it structure many people found uncomfortable. They cost more, but the benefit exists whether or not you ever need care, which solves the psychological problem that made people abandon the old policies.

Build a separate healthcare line item into your retirement projections. If your plan assumes $5,000 per month in expenses and healthcare is somewhere inside that number rather than a distinct line, the plan is likely short. Fidelity’s $345,000 couple estimate averages to roughly $15,000–$17,000 per year over a 20- to 22-year retirement — money that needs its own bucket, not just a share of the general living expenses category. And the account funding that bucket needs to be allocated correctly for a multi-decade horizon, not parked in cash because the word “healthcare” makes it feel like an emergency fund.

The $345,000 figure is the average. For people with chronic conditions, significant long-term care needs, or retirement in high-cost markets, the actual number is higher. Planning around the average while understanding you might be above it is more useful than ignoring the category until a hospital billing statement forces the conversation. The wealth management system you build now should have a specific answer for this. Most don’t.