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Healthcare Costs in Retirement: What Should You Expect?

Healthcare can become one of the most significant and unpredictable expenses in retirement.

Yet many workers have not estimated how much they may need. In a 2025 retirement survey, only 41% of workers reported calculating how much savings they would need for retirement healthcare expenses.

At True North Wealth Management, we believe healthcare belongs at the center of retirement planning—not as an expense to address after retirement begins.

Medicare Does Not Make Healthcare Free

Medicare can provide essential coverage beginning around age 65, but retirees still face premiums, deductibles, copayments, coinsurance, and services the program does not cover.

A retirement healthcare budget may need to include several categories.

1. Medicare Premiums

Most people receive premium-free Medicare Part A because they or a spouse paid Medicare taxes long enough while working.

Medicare Part B requires a monthly premium. The standard Part B premium is $202.90 per month in 2026, although higher-income beneficiaries may pay more.

Medicare Part D prescription coverage also typically requires a premium, which varies by plan. Higher-income beneficiaries may owe an additional income-related charge.

Part B premiums are often deducted automatically from Social Security benefits. Because retirees may never pay the bill directly, they can easily overlook the expense when estimating retirement income.

2. Deductibles, Copayments, and Coinsurance

Original Medicare does not cover every dollar of approved care.

Depending on the service, retirees may owe:

A Medicare Supplement, or Medigap, policy may help cover some costs left by Original Medicare. Medicare Advantage plans use different premiums, provider networks, copayments, and annual limits.

Compare the full cost of each option—not just the monthly premium.

3. Prescription Drug Costs

Medicare Part D plans vary by premium, formulary, deductible, pharmacy network, and cost-sharing requirements.

For 2026, no Part D plan may charge a deductible above $615. Covered Part D drug spending is also subject to an annual out-of-pocket limit under current Medicare rules.

Review coverage every year because plan premiums, formularies, pharmacies, and medication costs can change.

4. Dental, Vision, and Hearing Expenses

Original Medicare generally does not cover routine:

Some Medicare Advantage plans offer limited benefits for these services, but coverage and provider access vary.

Retirees should include these costs separately rather than assuming Medicare will pay them.

5. Long-Term Care

Long-term care may create one of the largest retirement risks.

Medicare generally does not cover ongoing custodial care, such as extended help with bathing, dressing, eating, or other daily activities. Care may be provided at home, in assisted living, or in a nursing facility.

Potential funding sources may include:

Long-term care planning should remain separate from routine Medicare cost planning.

Income Can Affect Medicare Premiums

Higher-income retirees may pay income-related surcharges on Medicare Parts B and D.

Medicare generally determines these charges using modified adjusted gross income from the tax return filed two years earlier. Large capital gains, Roth conversions, retirement withdrawals, or business income may therefore affect future premiums.

Tax-aware retirement planning can help clients understand these interactions before making major financial decisions.

Estimate Costs for the Entire Retirement

A single national estimate can provide context, but it cannot tell you exactly what your household will spend.

Your costs may depend on:

Build healthcare into your annual retirement budget and allow the estimate to rise over time.

Prepare Before Retirement Begins

Consider taking these steps:

Make Healthcare Part of Your Retirement Strategy

Healthcare expenses can affect how much you need to save, when you can retire, how much you can safely spend, and which accounts you use for income.

At True North Wealth Management, we help clients coordinate healthcare planning with retirement income, Social Security, investments, taxes, insurance, and estate goals.

A thoughtful healthcare estimate cannot eliminate uncertainty, but it can help you enter retirement with fewer surprises and greater financial confidence.

Important Disclosures:
This material is for informational purposes only and is not intended as tax, legal, accounting, healthcare, insurance, Medicare, or individualized financial advice. Medicare premiums, deductibles, coverage, income-related adjustments, and plan provisions may change. Healthcare and long-term care costs vary substantially by person and location. Consult Medicare, qualified tax, legal, insurance, healthcare, and financial professionals regarding your circumstances.

1. EBRI.org, 2025


2. Investopedia.com, June 11, 2025

3. Medicare.gov

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite and customized by True North Wealth Management LLC to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.