Most people assume Medicare takes care of their healthcare needs once they turn 65. It doesn't. According to Fidelity Investments, an average retiring couple should expect to spend $345,000 on healthcare in retirement, and that estimate is after Medicare kicks in and before any long-term care costs are factored in. In this article, we walk through where Medicare actually falls short, what those gaps cost in real numbers, and how the B.O.S.S. Retirement Blueprint builds healthcare into the plan from day one rather than treating it as an afterthought.
A woman came into our office a while back with a big smile on her face. I asked what she was celebrating. She said it was her 65th birthday, and she was thrilled because Medicare was kicking in, meaning her medical, dental, and vision were all finally covered.
I had to tell her that wasn't quite right, and it wasn't the news she expected to hear on her birthday.
We've had a version of that conversation more times than we can count. It's one of the most common assumptions we run into, and it's understandable. Medicare sounds comprehensive. The truth is it was built to cover a specific set of medical costs, and the pieces it leaves out tend to be the expensive ones.
Frank (name changed) retired from the fire department at 58 with a solid pension, full of confidence that he'd done everything right. He called us a few years later, close to Medicare eligibility, just to talk through the numbers. What came up in that conversation is worth walking through, because Frank and Denise (name changed) are a lot like many of the families we sit down with.
Frank assumed his pension, once adjusted for a few cost of living bumps, would keep pace with what he and Denise needed. What he hadn't accounted for was that his pension was fixed. It wasn't going to grow the way his expenses would. Social Security has a cost of living adjustment attached to it, but that adjustment hasn't kept pace with real inflation either. Since 2010, the purchasing power of the average Social Security check has dropped by roughly 40 percent, according to data cited during our own research into this topic. For a couple relying on Social Security as a primary income stream, that erosion adds up quietly, year after year.
Then there was healthcare. Frank retired at 58, seven years before Medicare eligibility, and had to bridge that gap with private coverage. Once Medicare did kick in, he and Denise were surprised to learn how much they'd still be paying out of pocket for dental, vision, and hearing care, none of which Medicare covers in full. When we ran the numbers with them, it became clear that healthcare wasn't a line item they could estimate loosely. It needed its own dedicated plan, separate from their general retirement income.
We built that plan around three categories of income: income for today's expenses, income that keeps pace with inflation, and income specifically earmarked for rising healthcare costs. That third bucket is the one most retirement plans skip entirely, and it's often the one that causes the most stress later.
Medicare Part A and Part B cover a meaningful amount of hospital and medical care, but dental, vision, and hearing are largely excluded unless you carry supplemental coverage. Long-term care is not covered at all under traditional Medicare. If you retire before 65, you're responsible for finding your own coverage until Medicare eligibility begins, which can mean years of paying premiums on top of everything else.
A study cited by Barron's found that one in five Americans have never considered healthcare costs as part of their retirement planning, and 17 percent report having taken no action to prepare for them whatsoever. That's a significant number of families walking into retirement without a plan for what tends to become one of their largest ongoing expenses.
Healthcare costs also don't rise at the same rate as general inflation. Data from the Health System Tracker shows healthcare costs have climbed roughly 120 percent since the year 2000. Whatever your healthcare spending looks like today, it's reasonable to expect meaningfully higher costs 20 or 30 years into retirement, since that's the timeline most healthy 65-year-olds are actually planning for.
Long-term care is the piece people tend to underestimate most, often because it's uncomfortable to think about while you're still healthy. The 2025 Genworth Cost of Care Survey puts current national costs like this: assisted living communities run at a median of $70,800 per year. Home health aide care runs slightly higher, at $77,792 annually, since it involves individualized rather than shared staffing. A homemaker service, someone who comes in to cook and clean, averages $75,504 a year. Skilled nursing runs considerably higher, from $111,325 for a shared room up to $127,750 for a private room.
These are current national medians, and they tend to increase each year.
We're not big proponents of simply buying a long-term care insurance policy and considering the problem solved. In our experience, many of these policies lock in coverage terms for a set number of years, often five or ten, and by the time care is actually needed, premiums can escalate sharply to keep pace with rising costs, sometimes by 25, 50, or even 100 percent year over year once the guaranteed period ends. That's why we think about long-term care as one piece of a broader income and asset strategy rather than a single policy purchase made once and forgotten.
None of this is meant to be alarming for its own sake. It's meant to be useful. Fidelity's $345,000 estimate for a retiring couple's healthcare costs reflects coverage after Medicare begins, and it still doesn't include long-term care. Layer that in, and the number most families should actually be planning around is considerably higher than what Medicare alone will handle.
This is why we built the B.O.S.S. Retirement Blueprint around a structure that treats healthcare as its own dedicated category rather than something that gets absorbed into general retirement income. Families who plan for it specifically tend to feel far less blindsided when costs show up, because they expected them and budgeted for them years in advance.
Does Medicare cover dental, vision, and hearing? No, not under traditional Medicare. Most people need a separate supplemental plan or Medicare Advantage plan to get any coverage in these areas, and even then, coverage is often limited.
What does Medicare not cover at all? Long-term care is the biggest gap. Custodial care, assisted living, and most home health aide services fall outside of what Medicare pays for.
How much should a couple budget for healthcare in retirement? Fidelity's research puts the average couple's healthcare costs at $345,000 over the course of retirement, after Medicare coverage begins and before long-term care is factored in.
What if I retire before 65? You'll need to secure private coverage or continue employer coverage until Medicare eligibility begins. This gap should be built into your retirement income plan well before you retire.
Is long-term care insurance worth it? It can be part of a broader strategy, but we recommend planning long-term care alongside your overall income and asset strategy rather than relying on a standalone policy, since premiums on these policies can rise significantly over time.
Healthcare costs touch every part of a retirement plan, from how much you need in guaranteed income to how you structure withdrawals from your accounts. The B.O.S.S. Retirement Blueprint is a free, personalized, one-page retirement plan that accounts for healthcare, taxes, income, and legacy planning as part of one complete picture.
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Ryan Thacker is Co-Founder of B.O.S.S. Retirement Solutions and B.O.S.S. Retirement Advisors, a fiduciary RIA based in Lehi, Utah. Alongside his brother Tyson, Ryan has helped more than 55,000 area families across Utah, Idaho, Washington, and Arizona make informed decisions about their retirement plans that go beyond savings targets to address income, taxes, healthcare, and long-term financial security. B.O.S.S. currently manages more than $1 billion in retirement assets across 10+ office locations.
This article is for educational purposes only and does not constitute personalized financial, tax, or legal advice. Consult a qualified financial professional before making any financial decisions. Healthcare and long-term care cost figures are sourced from Fidelity Investments, the 2025 Genworth Cost of Care Survey, Barron's, and the Health System Tracker, and reflect national averages that will vary based on individual circumstances, location, and health status. Advisory services offered through B.O.S.S. Retirement Advisors, LLC, an SEC-Registered Investment Advisor. Insurance products and services offered through B.O.S.S. Retirement Solutions.
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