Rising healthcare costs are reshaping retirement planning as Americans seek clarity, confidence, and long-term financial stability.
Featuring Insights from Andrew Kinder, Retirement Planner at Lantern FinancialÂ
If you ask a pre-retiree what keeps them up at night, it usually isn’t stock market volatility or sequence of returns risk. Today, the number one anxiety threatening the American dream of retirement is healthcare.
And the data firmly validates those fears. According to the 2025 Retiree Health Care Cost Estimate released by Fidelity Investments, a 65-year-old retiring today can expect to spend an average of $172,500, or $345,000 for a couple, on healthcare and medical expenses throughout their retirement.
Even more alarming is a recent 2026 report from the Employee Benefit Research Institute (EBRI), which modeled for extreme cases and longevity. The EBRI found that a couple with high prescription drug needs might require up to $469,000 in savings just to have a 90% chance of covering all their out-of-pocket medical expenditures.
When faced with these staggering, six-figure estimates, many pre-retirees freeze. We spoke with Andrew Kinder, a retirement planning specialist at Lantern Financial, about how to bridge this “health-wealth gap” and transition into retirement with confidence.
The Danger of the “Unknown”
A common misconception among workers is that Medicare will function as a financial catch-all once they turn 65. In reality, Medicare was never designed to cover everything. Retirees are still responsible for Part B and Part D premiums, deductibles, copays, dental and vision care, and potential income-related surcharges (IRMAA) if their retirement income crosses certain thresholds. Furthermore, healthcare inflation historically outpaces general economic inflation, meaning these costs compound significantly over a 20- or 30-year retirement.
According to Kinder, it is this lack of clarity that causes damage to a retiree’s well-being.
“When people approach retirement, the fear of unexpected medical bills often overshadows the excitement of their new chapter,” says Kinder. “Instead of retiring confidently, they end up delaying their retirement and continuing to work, not because they find immense purpose in their jobs, but as a defense mechanism. They feel the need to relentlessly hoard cash just to protect themselves against the unknown.”
Moving From a “Lump Sum” to a “Structured Plan”
Kinder emphasizes that the anxiety fundamentally stems from how retirees view their money.
During their working years, the focus is on accumulation, building a massive lump sum of wealth. But in retirement, pulling randomly from that lump sum to pay for rising medical costs can feel incredibly destabilizing.
“The anxiety comes from treating healthcare as a wild card,” explains Kinder. “If you are just pulling from a general pile of savings and hoping it doesn’t deplete, every single medical expense or premium increase feels like a direct threat to your financial survival. To fix the anxiety, we have to change the strategy.”
The antidote to this fear is moving away from arbitrary savings goals and building a customized, predictable distribution plan. A comprehensive retirement plan doesn’t just guess at future costs. It meticulously stress-tests your portfolio against projected healthcare inflation, potential long-term care needs, and Medicare premiums.
“When you build a distribution plan that specifically accounts for healthcare costs over the next two or three decades, the fear dissipates,” notes Kinder. “You transition from hoping you have enough to knowing exactly which accounts will fund your medical needs in the most tax-efficient way possible. That predictability is what ultimately buys you a good night’s sleep.”
The Early Retirement Trap
And the planning doesn’t just start at age 65. For those looking to retire early, the landscape in 2026 is even more treacherous. With the expiration of expanded Affordable Care Act (ACA) subsidies at the end of 2025, early retirees now face a massive “subsidy cliff.” They should carefully manage their taxable income because pulling just one wrong dollar from a retirement account could cause their ACA healthcare premiums to skyrocket by thousands of dollars a year.
The Takeaway
Healthcare costs are an unavoidable reality of aging, whether you retire at 60 or 65, but they do not have to dictate your timeline or steal your confidence. By working with a fiduciary, you can stop worrying about the cost of living and actually get back to living.
Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser. This commentary reflects the personal opinions, viewpoints and analyses of the author, Andrew Kinder. It does not necessarily reflect the views of Foundations Investment Advisors, LLC (“Foundations”) and is provided for educational purposes only and the contents are solely maintained by and the responsibility of the applicable third party. The third-party content is subject to change at any time without notice, and does not represent an express or implied opinion or endorsement of any specific investment opportunity, investment strategy or planning strategy. Foundations in no way deems reliable any statistical data or information obtained from or prepared by third-party sources in this commentary, nor does Foundations guarantee its accuracy or completeness. No legal or tax advice is provided or intended.
Fidelity Investments. (2025). 2025 Retiree Health Care Cost Estimate. Retrieved from Fidelity.com.
Employee Benefit Research Institute (EBRI). (2026). Projected Savings Medicare Beneficiaries Need for Health Expenses.
Centers for Medicare & Medicaid Services (CMS) & The Inflation Reduction Act. (2026). Expiration of Expanded Premium Tax Credits (ACA Subsidies).
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