For many Americans, the biggest financial shock in retirement isn’t housing or travel—it’s health care. Experts warn that middle-class retirees often underestimate just how expensive medical costs can be once they leave the workforce.
According to Fidelity’s 2025 Retiree Health Care Cost Estimate, the average 65-year-old retiring this year will spend about $172,500 on healthcare and medical expenses throughout retirement—and that doesn’t even include long-term care. Shockingly, 1 in 5 Americans admit they’ve never factored these expenses into their retirement plans.
Financial expert Peter Dunn, host of the Pete the Planner Show, says many workers are blindsided because their current employer-sponsored insurance hides the true cost. “Workers are used to having a lot covered that just isn’t with Medicare,” he explained. Medicare premiums vary by income, and essentials like dental, vision, hearing, and prescriptions aren’t fully covered. Middle-class couples, Dunn adds, could easily spend $6,000 to $10,000 out of pocket every year.
So, what can pre-retirees do to prepare? Dunn offers several strategies:
- Invest in your health now. Staying active, maintaining a healthy weight, and avoiding smoking can drastically reduce the risk of costly chronic conditions later in life.
- Pay off your mortgage before retirement. Without guaranteed pensions, today’s retirees face tighter budgets, and mortgage payments can eat away at fixed income.
- Don’t sacrifice retirement for college tuition. Dunn warns against parents derailing their financial future to fund their children’s education. More affordable paths, like trade schools, may be wiser.
- Leverage a Health Savings Account (HSA). For those with high-deductible plans, HSAs provide triple tax benefits and act like a “healthcare 401(k).”
Ultimately, middle-class retirement success often comes not from saving millions but from lowering expenses and preparing for healthcare realities. As Dunn puts it: “The middle class can’t always save more money—they have to reduce their cost of living.”