Jul 3, 2026
When it comes to your retirement savings, it can feel like there’s always something to worry about. Perhaps you’re stressed that inflation is going to squeeze your retirement income. Or maybe market ups and downs put your stomach in knots.
New research points to one threat to retirement security that’s consistently at the top of people’s minds: health-related costs.
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A paper from the LIMRA Retirement Income Institute found that multiple independent surveys showed that healthcare and long-term care costs “consistently rank among the most significant financial concerns” for retirees and those nearing retirement. These concerns frequently exceed worries about recessions, inflation or market volatility, the paper adds.
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Rising costs
It’s no wonder that high health-related costs have become a top concern when it comes to retirement planning. According to the LIMRA paper, rising insurance premiums and out-of-pocket costs have meant that healthcare spending per capita has nearly doubled since 1987.
Inflation for medical care also typically outpaces general (or base) inflation. According to retirement researcher David Blanchett, medical inflation averaged 5.1% per year from January 1957 to May 2025, while base inflation averaged 3.56%.
Blanchett and other researchers have found, however, that even when factoring in that healthcare inflation is higher than base inflation, and that healthcare spending increases at older ages, retiree spending has been found to decline and not in fact keep pace with inflation.
Still, healthcare spending can take a huge toll on retirement savings. Fidelity Investments estimates that a 65-year-old who retired in 2025 could spend $172,500 on health care in retirement on out-of-pocket expenses (prescriptions, co-payments, deductibles) and Medicare premiums. And that estimate does not include long-term care costs.
Consulting and actuarial firm Milliman’s 2025 estimates for retiree health spending are even higher, with men who retired at 65 in 2025 projected to spend $275,000 and women projected to spend $313,000.
Americans are also living longer — about one in three Americans who were 65 in 2024 will live until at least age 90, and one in seven will live until at least age 95, according to the Social Security Administration.
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And then there’s long-term care costs, possibly one of the biggest worries when it comes to healthcare spending in retirement.
Research from the Urban Institute estimates that more than half (57%) of Americans who retired in 2022, at age 65, will “develop a disability serious enough to require” long-term care, and one in five individuals (22%) will require care for more than five years.
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Planning for healthcare costs
Retirement researcher Blanchett notes that planning for healthcare costs in retirement is a “clear wildcard,” especially for Americans.
“Transferring this risk to some type of third party via insurance (e.g., long-term care insurance) would seem optimal, but many retirees in the United States are unable to qualify for long-term care insurance (due to poor health) and many of those who have had long-term care insurance have experienced significant premium increases over time (as insurers more appropriately reprice the risk),” Blanchett writes.
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So, how can you plan for the unknowable?
Many experts point to financial advisors when it comes to planning for healthcare costs, since they are able to run projections on many possible healthcare scenarios, and help you plan from there.
“We can model multiple scenarios — home care for a few years, a prolonged nursing-home stay or a cognitive decline that extends care seven to 10 years,” Chris Giambrone, a certified financial planner in New Hartford, N.Y., told MarketWatch. “Then we layer those costs on top of market downturns and inflation.”
You can also consider whether a health savings account (HSA) is a good option for you. HSAs offer multiple tax benefits: when you contribute, it reduces your taxable income; your investments grow tax-free; and you can make tax-free qualified withdrawals.
There is also the option of long-term care insurance, though these policies have become increasingly expensive, according to AARP. There are hybrid policies that offer long-term care coverage and some life insurance, but again, AARP says, “hybrid policies are more expensive than traditional.”
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Rebecca Payne has more than a decade of experience editing and producing both local and national daily newspapers. She's worked on the Toronto Star, the Globe and Mail, Metro, Canada's National Observer, the Virginian-Pilot and Daily Press.
