Fidelity Says Retirement Health Costs Hit a New High: What Canadians Can Learn
Fidelity's latest report shows retirement healthcare costs in the US have reached a new high of $185,500 for the average couple. While the data is American, the underlying trend—rising medical expenses in later life—is a global concern. This article breaks down the numbers, explains what they mean for Canadians, and offers practical steps to prepare financially, including using tools like ccLuca to track health-related expenses.
Fidelity Investments just dropped a sobering number: the average retired couple in the United States will now need an estimated $185,500 to cover healthcare costs in retirement. That's up from $165,000 just a few years ago. And while the data is American, the message is universal—healthcare in later life is getting more expensive, and most of us are not prepared.
Now, I know what you're thinking: "But I'm Canadian. We have universal healthcare." And you'd be right—partially. But here's where it gets tricky. Medicare in the US has gaps, and so does our own system. Prescription drugs, dental care, vision, hearing aids, long-term care—these are not fully covered by provincial health plans. The costs add up. And if Fidelity's numbers tell us anything, it's that underestimating those costs is a dangerous game.
What Fidelity Actually Found
Fidelity's research, published in mid-2026, focuses on pre-retirees' misconceptions about Medicare. The summary from the source notes that "the majority of pre-retirees underestimate what Medicare covers." That's a polite way of saying people are walking into retirement with a false sense of security.
Let's break down the $185,500 figure. It's for a 65-year-old couple retiring this year, assuming they live average lifespans. It covers Medicare Part B and D premiums, copayments, deductibles, and out-of-pocket drug costs. It does not include long-term care, which can easily double that number. Fidelity has been tracking this since 2002, and the trend is clear: costs are rising faster than inflation.
"The majority of pre-retirees underestimate what Medicare covers." — Fidelity Investments
Why This Matters for Canadians
I've spent years reading financial planning literature, and one thing is consistent: we Canadians love to assume our system will catch us. It won't. Not entirely.
Consider this: the Canadian Institute for Health Information reports that out-of-pocket health spending in Canada was over $35 billion in 2024. That's per person spending roughly $900 annually on things like prescription drugs, dental, and vision care. In retirement, those numbers climb as you age and need more services.
A 2023 study by the Healthcare of Ontario Pension Plan (HOOPP) found that a 65-year-old couple in Canada should expect to spend about $250,000 on healthcare over their retirement. Sound familiar? It's not far off from Fidelity's US number. The difference is that Canadians often don't plan for it because they think "it's covered." It's not.
The Hidden Costs: What People Forget
Let me be pedantic for a moment. When we talk about retirement healthcare costs, we usually think of doctor visits and hospital stays. But the real budget-busters are:
- Prescription drugs: No universal pharmacare in Canada yet. Private insurance helps, but premiums rise with age.
- Dental care: Not covered by most provincial plans after age 65 unless you're on social assistance.
- Vision and hearing: Glasses, contact lenses, hearing aids—all out of pocket.
- Long-term care: This is the elephant in the room. A private room in a long-term care facility can cost $3,000 to $6,000 per month in many provinces.
And here's the kicker: most people don't track these expenses. They pay for a prescription here, a dental cleaning there, and it all adds up without a second thought. That's where a tool like ccLuca becomes genuinely useful. Snap a photo of your receipt, and the AI extracts the data in seconds. You can categorize it as "healthcare" and see exactly what you're spending over time. No IT setup, no enterprise software—just you and your expenses, sorted.
What You Can Do About It
On the one hand, the numbers are daunting. On the other hand, knowing them early gives you time to adjust. Here's a practical plan:
1. Start tracking now
You cannot plan what you don't measure. Use a simple expense tracker—like ccLuca—to log every health-related expense for six months. You'll be surprised at the total.
2. Build a dedicated health savings fund
Financial planners recommend setting aside 3-5% of your pre-retirement income annually for healthcare in retirement. For a household earning $100,000, that's $3,000-$5,000 per year. Invest it in a TFSA or RRSP.
3. Understand your provincial coverage
Each province has different rules. For example, Ontario's OHIP+ covers some drugs for seniors, but not all. British Columbia has Fair PharmaCare. Know what you're entitled to and what you're not.
4. Consider private insurance
If you retire before 65, you'll need private coverage until provincial plans kick in. Even after 65, supplemental insurance for drugs and dental can save you thousands.
5. Factor long-term care into your plan
This is the hardest one. Long-term care insurance exists in Canada but is expensive. Alternatively, you can self-insure by earmarking a portion of your home equity or investments.
The Bottom Line
Fidelity's report is a wake-up call, even for those of us north of the border. Retirement healthcare costs are real, they're rising, and they're not fully covered by any system. The best time to start preparing was twenty years ago. The second best time is today.
Start by getting a clear picture of your current health spending. Use a tool that makes it easy—ccLuca is built for exactly this kind of personal financial awareness. No enterprise software, no learning curve. Just snap, track, and plan.
Because the expenses you forget to claim could buy you an iPhone every year. Or worse, they could leave you short in retirement.
Source: Fidelity says retirement health costs just hit a new high