Are you worried about being able to afford healthcare once you’ve retired? If so, you’re not alone. A recent D.A. Davidson survey found that nearly 8 in 10 Americans are concerned about healthcare costs during their retirement years, and yet fewer than half have factored these costs into their retirement planning. Healthcare costs can compound quickly, but there are strategies that can help protect your retirement if you plan ahead. From funding a health savings account to strategically timing Medicare enrollment, proactive planning can help you protect your financial security, whether you’re already retired or are preparing to do so.
Healthcare in Retirement: Estimated Costs
According to Fidelity Investment’s latest estimates, an American couple retiring in 2025 at age 65 can expect healthcare costs to run $345,000 over the course of their retirement, up nearly 41% from the $245,000 estimate in 2015. And healthcare inflation typically runs at least twice the rate of overall inflation, noted Andrew Crowell, D.A. Davidson’s Vice Chairman of Wealth Management.
“Healthcare is one of the most significant, and yet still underestimated, expenses that most retirees will face,” said Crowell.
Before you panic about healthcare costs eating up all—or even some—of your savings, having even a ballpark number for potential costs is a great starting point for making decisions that can protect your assets down the line.
Health Savings Accounts
For individuals with high-deductible health insurance plans, a health savings account (HSA) is a triple tax-advantaged tool that can be used for retirement planning and health costs.
Triple tax-advantaged means the money you contribute to the account reduces the amount of income you are required to pay taxes on, it grows tax-free, and can be distributed tax-free for qualified expenses. Money within this vehicle can also be invested once it reaches a certain threshold. Crowell encourages this, as consistent funding and strategic investment can greatly reduce the financial burden of healthcare in retirement.
An HSA can accumulate contributions year after year, as it is not a “use it or lose it” account. In addition to using funds to pay for doctor visits, prescriptions, and hospital stays, HSA dollars may also cover over-the-counter health items, medical equipment and supplies (such as blood pressure monitors or glucose test strips), health tech, and more.
For those eligible, taking advantage of an HSA can help you keep more money in your pocket. If you have a high-deductible plan and don’t already have an HSA, it’s worth considering whether opening one makes sense for your situation.
For more information, check out 5 Things You May Not Know About HSAs.
Medicare
Another strategy for keeping money in your pocket is to strategically time when you enroll for Medicare. Most people become eligible at age 65, but that doesn’t mean you have to sign up immediately.
If you are still working at age 65 and have health insurance through your employer, you can delay enrollment without a penalty and avoid duplicate coverage and unnecessary premiums. When you do retire later and lose employer-related benefits, you’ll be able to enroll in Medicare through a special enrollment period—just be sure to enroll in the allotted time frame to avoid late penalties. Or, you can compare the cost of the employer plan and benefits vs. that of Medicare premiums and coverage at 65, and choose the option that makes sense for your family and/or is most cost-effective.
Another option is to choose which elements of Medicare you want to enroll in and defer the others for later. Since Medicare covers various elements of care, such as hospital insurance, medical insurance, prescription coverage, and Medigap or Medicare Advantages for additional coverage, you can select when to enroll based on when you need the coverage. Some elements have a premium, others may not; stay aware of deadlines to avoid penalties and ensure you have the coverage you need.
A note: Medicare premiums are tied to income, and depending on your modified adjusted gross income for the previous two years, your Income-Related Monthly Adjustment Amount (IRMAA) bracket may determine a higher premium for medical insurance and prescription drug coverage. Visit ssa.gov for more information on Medicare benefits, enrollment, and IRMAA.
Talk to a Financial Professional
“Being prepared for rising healthcare costs is important, but being informed is the first, most crucial step,” Crowell said.
In addition to assisting with the strategies mentioned above, a financial professional can help you clarify your long-term goals, including understanding your healthcare options and anticipating costs more accurately. They can also provide recommendations for investing your HSA dollars based on your needs and cash flow, to provide financial security for the many wonderful years of retirement ahead of you.
D.A. Davidson & Co. is a registered broker-dealer and registered investment adviser that does not provide tax or legal advice. Information contained herein has been obtained by sources we consider reliable but is not guaranteed and we are not soliciting any action based upon it. Any opinions expressed are based on our interpretation of the data available to us at the time of the original article. These opinions are subject to change at any time without notice. Copyright D.A. Davidson & Co., 2026. All rights reserved. Member FINRA and SIPC.