Many companies featured on Money advertise with us. Opinions are our own, but compensation and
in-depth research may determine where and how companies appear. Learn more about how we make money.

Elderly woman examining the costs of the medicines she's about to buy
Getty Images

When planning for retirement, health care costs can be one of those budget line items that takes a back seat to other cost-of-living expenses. But even with a Medicare insurance plan, American retirees will likely have to pay tens of thousands of dollars — with a handful of people hitting the six-figure mark — in out-of-pocket health care costs, new research finds.

In a brief published by the Center for Retirement Research at Boston College, research economist Karolos Arapakis breaks out categories of health care spending in retirement. Across the population of retirees, Medicare covers close to two-thirds of the cost of health care, with Medicaid covering an additional 11% and a patchwork of other government and private programs kicking in another 4%. That leaves close to 22% — not including the cost of premiums — that retirees themselves have to come up with.

How much does the average retiree spend on health care?

Arapakis found that the average retiree household incurs $21,400 in health care costs annually. This includes both covered and out-of-pocket care. (The research looked at households with two spouses as well as those with only one surviving spouse.) That average cost disguises the fact that many families wind up paying considerably more: 10% have annual health care costs of $43,500 or higher.

Even with nearly 80% of those costs covered by insurance, that still adds to a significant financial burden on retirees, which many are unprepared to afford. Starting when members reach the age of 65, Arapakis estimated that the average household will spend $67,000 on out-of-pocket health care costs over the remainder of their lifetime, while 10% will be saddled with a whopping $138,000 or more.