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Fidelity released its 25th annual retiree health care cost estimate this week, and it made the rounds the way it does every year: a big national number meant to shock you into planning ahead. It works, for about a day. Then most people go back to guessing.
The number is useful as a wake-up call. It's not useful as your actual budget. Your Medicare premiums, your prescriptions, and your supplemental coverage are specific to you, not to a national average. Build your own number below, then keep it somewhere you'll actually check it again.
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Focus on building an honest monthly baseline.
Interactive toolBuild your own baseline before you react to a headline numberUse it to protect housing, food, medication, and utilities first, then see what's actually left for medical costs.Show the toolHide the tool
Protect housing, food, medications, and utilities first, then download a snapshot for your next call or budget review.
What the Fidelity Estimate Actually Tracks
Fidelity's estimate covers Medicare premiums, deductibles, copays, and other out-of-pocket medical costs a person is expected to pay across a full retirement, starting at age 65. It is not a single year's bill. It also, every year, explicitly does not include long-term care, which is the cost most likely to blow up a retirement budget if it's not planned for separately.
ChecklistKnow what's in the number and what isn'tCheck these before you compare Fidelity's estimate to your own situation.Show the checklistHide the checklist
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Run Your Own Monthly Medical Math
A national lifetime estimate is hard to act on. A monthly number is not. Add up your actual Medicare premiums, your supplemental or Medicare Advantage premium if you have one, and your average monthly prescription and copay costs. That's your real routine medical spend, separate from everything else in your budget.
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Add up your routine monthly medical costs
Use your real numbers, not estimates, for My routine costs, premiums and prescriptions, feel too high.
Medical spending total: $485
Cash left after routine medical costs: $1,915 • Essentials use 20% of income.
If this result is tight, protect housing, food, and medications first, then look at where a Medicare Savings Program or supplemental plan change could help.
If that result is negative or close to zero every month, you don't have a spending problem so much as an income-to-cost mismatch, and that calls for checking whether you qualify for a Medicare Savings Program or Extra Help with prescription costs, not just cutting further.
Plan Separately for the Cost the Estimate Skips
Long-term care is the single biggest hole in almost every retiree's health budget, because the national estimate you just read about doesn't count it and Medicare barely covers it. If you don't already have a plan for that scenario, even a rough one, build it before you need it, not during a crisis.
Read Building a Long-Term Care Cash Plan Before You Need One for how to start that separate fund, and Medicare's Coverage Gap: A Simple Budget Plan if the gap between what Medicare pays and what you actually owe is the part that keeps surprising you.
ChecklistDo these before the next bill catches you off guardSmall checks now save a scramble later for My routine costs, premiums and prescriptions, feel too high.Show the checklistHide the checklist
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Save your plan
Save the numbers you ran today so you can compare them again next year.
Common questions
What does Fidelity's retiree health care cost estimate actually cover?
It tracks Medicare Part B and Part D premiums, deductibles, copays, and other out-of-pocket medical costs a retiree is expected to pay across a full retirement starting at age 65. It does not include dental, vision, or hearing costs that Medicare typically excludes, and it does not include long-term care, which is usually the biggest gap in a retiree's health budget.
How do I build my own health care budget instead of relying on a national average?
Add up your actual Medicare premiums, any supplemental or Medicare Advantage premium, and your average monthly prescription and copay costs. That total is your real routine medical spend. Compare it against your monthly income separately from your other essential bills so you can see clearly whether the gap is a spending problem or an income problem.
What should I do if my routine medical costs leave almost nothing left over each month?
Check whether you qualify for a Medicare Savings Program or Extra Help with prescription costs before you start cutting other spending. Those programs exist specifically for retirees whose income doesn't comfortably cover Medicare's premiums and cost-sharing, and they can close the gap faster than trimming a already-tight budget.
Does the Fidelity estimate include long-term care costs?
No. Long-term care is excluded from the estimate every year, and it's also the cost Medicare covers the least. If you don't already have a separate plan for that scenario, even a modest one, it's worth starting now rather than waiting for a crisis to force the decision.
