Chart showing the median annual spending for individuals with high ($7,600), medium ($3,900), or low ($3,400) health risk.

Health status

How healthy are you? Your current level of health risk makes a big impact on how much you might spend.

Chart showing the percentages of people who have Traditional Medicare with employer-sponsored coverage (35%), Medicare Advantage with prescription coverage (32%), Traditional Medicare with prescription coverage and a Medigap plan (21%), and Traditional Medicare with prescription coverage (12%).

Medicare choice

There are lots of Medicare plans available, with different levels of coverage. You’ll need to choose based on your health needs.

Learn more about choosing a Medicare plan ⇲

$5,300: Amount of subsidies lost at retirement, on average**

Amount employer subsidizes

If an employer has been carrying part of the weight of your health care costs, the loss of those subsidies can make your retiree health insurance costs feel much higher.

Image showing how your median costs could change when you reach age 65 if you go from marketplace coverage*** ($12,800) to Medicare ($5,200).

Retirement age

If you retire before age 65, you’ll need to cover your own health insurance until Medicare kicks in.

Map showing the range of annual premiums for a Medigap plan†


Depending on where you retire, you’ll pay higher or lower than the average cost of health care.

$170,000: Yearly income above which a couple will begin paying additional amounts for Medicare††

Income in retirement

If you have a lot of money coming in, you’ll pay higher premiums for Medicare.

Putting it together

Here’s an example of how these factors could play out for a woman who’s age 60 right now.

 Billings, MTManhattan, NYCharlotte, NC

Lives in:
Billings, MT

Lives in:
Manhattan, NY

Lives in:
Charlotte, NC


Health risk:

Health risk:

Health risk:


Medicare Advantage + Part D

Traditional Medicare + Part D

Traditional Medicare + Part D + Medigap


High (increased premiums)

High (increased premiums)

Low (standard premiums)


Age 63

Age 65

Age 60


Annual cost:
$13,323/year at retirement
$3,467/year at age 65

Annual cost:
$4,304/year at retirement

Annual cost:
$2,206/year at retirement
$7,559/year at age 65



Your own costs will vary

Your expected health care costs will be different than anyone else’s. You’ll need to take into account the factors above to get an accurate assessment.


Consider health care options before you retire 

Your total retirement spending might be higher than planned once you accurately account for the cost of health care in retirement—especially if your employer has been generously subsidizing your preretirement costs.


As health costs rise, others come down 

For most people, increased costs on health care later in life will be somewhat offset by reduced spending on other categories.


Make health care spending part of your budget

You’ll find it much more useful to think about health care spending as an annual part of your budget, as opposed to a huge lifetime lump sum.

long-term care

Long-term care costs are different

You might not need to pay for long-term care at all, but if you do, it can be really expensive. Your retirement plan should separately address the potential for long-term care costs.

See our complete research on health care costs in retirement ⇲
Learn more about the types of health care costs you’ll face in retirement
Find out more about long-term care ⇲

Find out what you might spend on health care When it comes to retirement planning, knowing the “averages” only gets you so far. We can help! As part of our advice service, you’ll receive a retirement plan that includes a personalized annual health care estimate for your retirement, taking into account your health status, coverage choices, retirement location, and more.  Get more with advice from Vanguard.*For a 65-year-old woman in 2018.
**Average amount spent per worker for employee-only coverage, among employers who offer health care benefits.
***Silver plan.
†Plan F.


Unless otherwise noted, figures are sourced using the Mercer-Vanguard health care cost model, 2018. For more information on the data, see Planning for health care in retirement.