Experts Warn: Many Retirees Overlook $172,500 in Healthcare Costs for Retirement

As people prepare for retirement, they often meet with experts to make sure that they have done everything they need to before leaving the workforce. And while this process usually involves a lot of financial planning, investing, and careful consideration about long-term goals, the experts we spoke with say there’s one thing that many retirees forget to do during this process.

According to them, there’s one large expense that many adults over 60 fail to consider when planning for their golden years, and the experts we spoke with say it can cost you $172,500 if you’re not careful.

Most Retirees Make the Same Costly Assumption About Medicare

While many seniors are very tuned in to how much money they will need for their everyday expenses as they head into retirement, Jeffrey Corliss, CFP®, ChFC®, CLU®, CASL®, managing director, Hightower Signature Wealth, says that people often forget to factor their healthcare costs into their planning.

“Retirees often underestimate the cost [of] expenses in three areas—pre-Medicare coverage, ongoing healthcare costs, and long-term care—but the most common misconception is the scope of Medicare coverage,” he says. “Many people assume Medicare will cover most, if not all, of their healthcare expenses, including long-term care. In reality, Medicare provides only partial coverage and does not cover most long-term care needs.”

Another thing they often get wrong? The assumption that their health insurance coverage will remain the same. “When someone retires or loses employer-sponsored benefits, their healthcare coverage can change significantly,” Corliss says. “For example, continuing coverage through COBRA (editor’s note: this allows people to pay for their own coverage through their employer’s plan after their employment is terminated) can be expensive, and individual insurance policies may come at a higher cost or with different benefits.”

The Expense That Catches Most Retirees Completely Off Guard

While Lily Vittayarukskul, CEO and Co-Founder at Waterlily, says that many people underestimate healthcare costs, long-term care seems to be the one thing that throws retirees for a loop.

“Many families still assume it will be covered by Medicare, handled by Medicaid, or absorbed by family members,” she says. “That is where the largest planning gap tends to be.”

That’s because Vittayarukskul says that long-term care is not just a medical expense. “It is a multi-year labor, housing, family, and cash-flow expense,” she says. “It can involve help with bathing, dressing, meals, transportation, home care, assisted living or nursing home care.”

When people leave it out of the plan, Vittayarukskul says they are not just underestimating a bill, they are underestimating who will provide the care, who will coordinate it, and whose career, savings or retirement may be disrupted.

The Numbers That Should Make Every Pre-Retiree Pay Attention

When it comes to the price you’ll pay for overlooking these expenses, Vittayarukskul says it can add up. “For people retiring before Medicare eligibility, the pre-65 healthcare bridge can easily become a five-figure annual expense, especially if someone loses employer-subsidized coverage and has to pay for COBRA or individual market coverage,” she says, adding that the risk is not only the monthly premium, but also deductibles, coinsurance, and the possibility of reaching an annual out-of-pocket maximum.

“Once someone is on Medicare, healthcare is still not free,” Vittayarukskul says. “Fidelity’s 2025 retiree healthcare estimate found that a 65-year-old retiring in 2025 may need about $172,500 for healthcare and medical expenses throughout retirement, and that estimate does not include long-term care.”

Long-term care can be even more financially disruptive, according to Vittayarukskul, because the costs can be high and recurring for years.

“Genworth/CareScout’s 2025 Cost of Care Survey reported national median annual costs of roughly $80,080 for in-home non-medical caregiver services based on 44 hours per week, $74,400 for assisted living, about $114,975 for a semi-private nursing home room, and about $129,575 for a private nursing home room.”

What Experts Say You Should Do Right Now

Want to ensure you’re not blindsided by these costs in retirement? Nick Wolf, Wealth Advisor at Adams Wealth Partners, says a little preparation can go a long way. “The last thing I want for anyone is to wait until they are already retired to meet with a financial advisor, only to find out they need to go back to work because something was left out of their plan,” he says. “If someone is eligible, Health Savings Accounts (HSAs) are a great way to accumulate funds pre-tax and take tax-free withdrawals when used for medical expenses—but again, the earlier you start funding these accounts, the better.”

Wolf says that it’s important to start having these conversations as soon as possible. “As soon as someone begins to seriously think about retirement, it’s time to start a dialogue with a professional to help avoid mistakes that could have been planned for in advance.”

Related: Retirement Shock Is Real—Psychologists Say Most People Never See It Coming

Sources:

Lily Vittayarukskul, CEO and Co-Founder at Waterlily

This story was originally published by Parade on Jun 24, 2026, where it first appeared in the Life section. Add Parade as a Preferred Source by clicking here.