Healthcare and eldercare are among the largest expenses impacting retirement. EP Wealth outlines what these costs look like, where Medicare falls short, and how to plan for both your own care and a parent's. 

How Eldercare and Healthcare Costs Affect Your Retirement Plan

Healthcare is one of the largest and least predictable expenses most retirees face. According to Fidelity's 2025 estimate, a 65-year-old retiring today may need approximately $172,500 in after-tax savings to cover healthcare costs in retirement — and that figure does not include long-term care. For a couple, the number is roughly double.

For many people in their 50s and 60s, these costs are coming into focus at the same time a parent's care needs are increasing. If you're contributing to a parent's assisted living expenses, paying for in-home help, or stepping back from work to provide care yourself, those costs can reduce your savings rate or push back your retirement timeline.

The earlier you start planning for both your own healthcare costs and a parent's care needs, the more options you're likely to have.

Key planning considerations include:

• What Medicare covers and where significant gaps remain
• How long-term care costs can affect both your plan and a parent's finances
• How income levels in retirement can increase your Medicare premiums
• Strategies that may help manage healthcare and eldercare expenses alongside your other financial goals

What Medicare Covers — and Where the Gaps Are

Most retirees become eligible for Medicare at age 65. The program provides meaningful coverage, but it is not comprehensive, and it is not free.

• Medicare Part A covers hospital stays, skilled nursing facility care (limited to 100 days following a qualifying hospital stay), and hospice. Most enrollees pay no premium for Part A, but deductibles apply. In 2026, the inpatient hospital deductible is $1,736 per benefit period.
• Medicare Part B covers outpatient care, doctor visits, and preventive services. The standard Part B premium is $202.90 per month in 2026, with an annual deductible of $283.
• Medicare Part D covers prescription drugs. Part D includes a $2,100 annual cap on out-of-pocket drug spending. This is a relatively recent change that took effect in 2025 and has been adjusted upward for 2026.

Where the gaps are

Original Medicare does not cover dental, vision, or hearing in most cases. It does not cover extended long-term care. And it leaves enrollees responsible for copays, coinsurance, and deductibles that can add up over time.

Many retirees purchase supplemental coverage — either a Medigap policy or a Medicare Advantage plan — to help fill these gaps, each with its own cost and trade-off structure.

IRMAA surcharges

Higher-income retirees pay more for Medicare. The Income-Related Monthly Adjustment Amount (IRMAA) adds surcharges to both Part B and Part D premiums based on your modified adjusted gross income from two years prior. In 2026, IRMAA applies to individuals with income above $109,000 and couples above $218,000. These surcharges can add several hundred dollars per person per month.

Source: CMS.gov: 2026 Medicare Parts A & B Premiums and Deductibles; Final CY 2026 Part D Redesign Program Instructions

Medicare Costs at a Glance (2026)

Source: CMS.gov: 2026 Medicare Parts A & B Premiums and Deductibles; Final CY 2026 Part D Redesign Program Instructions

The Cost of Long-Term Care

Long-term care is where costs can escalate most dramatically — whether for yourself in the future or for a parent right now. This includes in-home care, assisted living, nursing home care, and memory care, services that Medicare covers only in narrow, short-term circumstances.

Roughly 70% of people over age 65 will need some form of long-term care during their lifetime. The duration varies widely: some people need a few months of in-home assistance, while others require years of facility-based care.

Current median costs, based on the 2025 CareScout Cost of Care Survey:

• In-home care (home health aide): approximately $35 per hour; full-time care can exceed $70,000 annually
• Assisted living: approximately $6,200 per month, or about $74,400 per year
• Nursing home (semi-private room): approximately $315 per day, or about $115,000 per year
• Nursing home (private room): approximately $355 per day, or about $129,600 per year

These are national medians. Costs vary significantly by geography.

These costs are also rising. Long-term care expenses have increased faster than general inflation in recent years, and demographic pressure — 10,000 Baby Boomers turn 65 every day through 2030 — is expected to sustain that trend.

When a Parent's Care Costs Affect Your Retirement

Some people approaching retirement are already helping pay for a parent's care. If a parent needs assisted living, in-home care, or nursing home placement, and their own resources are insufficient, adult children often step in to cover part or all of the cost.

This can affect your retirement plan in several ways.

• Direct financial impact. Contributing to a parent's care reduces the amount available for your own savings, investments, or debt repayment. Over several years, this can meaningfully change your retirement trajectory.
• Caregiving and lost income. Some adult children reduce their working hours or leave the workforce entirely to provide care. This affects current income, retirement account contributions, and in some cases Social Security benefits.
• Accelerated withdrawals. If you're already retired when a parent's care needs arise, funding their care from your own portfolio can accelerate your withdrawal rate and compress the timeline your assets need to last.
• Emotional decision-making. Care decisions are deeply personal, and financial considerations can be difficult to weigh in the moment. Having a plan in place before a parent's needs become urgent can help you make decisions that account for both your parent's well-being and your own financial position.

A few steps that may help you plan for a parent's care costs:

• Assess your parent's resources early. What income, savings, insurance, and benefits (including VA benefits, if applicable) does your parent have available? How far will those resources go under different care scenarios?
• Model the impact on your own plan. A financial advisor can help you project how different levels of eldercare spending would affect your retirement savings, withdrawal rate, and timeline.
• Explore whether your parent qualifies for benefits such as Medicaid, veterans' Aid and Attendance, or state-level home and community-based services waivers that could offset some costs.
• Coordinate among siblings. If multiple family members are involved, clarifying who contributes what — financially or through direct caregiving — can help reduce conflict and keep planning on track.

Planning Approaches for Healthcare and Eldercare Costs

There is no single solution for managing healthcare and eldercare costs in retirement. The right approach depends on your health, your assets, your income sources, and your family situation. Below are several strategies that may be worth discussing with your advisor.

Long-term care insurance

Traditional long-term care policies pay a daily or monthly benefit toward care costs. Hybrid policies, which combine life insurance or an annuity with long-term care benefits, have become more common and may appeal to individuals who want coverage but are concerned about paying premiums for a benefit they may never use. Premiums are generally lower when policies are purchased earlier.

Health savings accounts (HSAs)

If you are still working and enrolled in a high-deductible health plan, an HSA allows tax-deductible contributions that can be invested and withdrawn tax-free for qualified medical expenses at any age. In 2026, contribution limits are $4,400 for individuals and $8,750 for families, with an additional $1,000 catch-up for those 55 and older. HSA funds can be used in retirement for Medicare premiums, long-term care insurance premiums, and out-of-pocket medical expenses.

IRMAA planning

Because IRMAA surcharges are based on income from two years prior, managing your adjusted gross income in the years before and during retirement can affect what you pay for Medicare. Roth conversions done strategically in lower-income years, qualified charitable distributions (QCDs) from IRAs, and careful withdrawal sequencing across account types may help keep income below IRMAA thresholds.

A dedicated healthcare reserve

Some retirees set aside a specific pool of assets designated for healthcare expenses, separate from their general retirement spending. This can help prevent large or unexpected medical costs from disrupting your broader income plan.

Coordination with estate planning

How care is funded — both your own and a parent's — can affect what is available to pass to heirs. For individuals with significant assets, structuring ownership and planning for potential Medicaid considerations in advance may help preserve more of your estate. EP Wealth's estate planning services can help you think through these questions alongside your broader plan.

How EP Wealth Can Help

Healthcare and eldercare costs are difficult to predict with precision, but they can be planned for. EP Wealth financial advisors work with clients to build retirement projections that account for healthcare expenses alongside income needs, tax obligations, and estate goals. This may include modeling different long-term care scenarios, evaluating insurance options, assessing the impact of a parent's care costs on your own plan, and adjusting withdrawal strategies to manage IRMAA exposure.

By reviewing these assumptions regularly and coordinating across your full financial plan, we can help you prepare for healthcare and eldercare costs without losing sight of your other priorities. Contact an advisor near you to start the conversation.

DISCLOSURES

• Request an appointment with an EP Wealth Advisor when you have a minimum of $500,000 in investable assets – which includes qualified retirement plans (IRA, Roth IRA, 401(k), taxable brokerage, cash (savings / checking) and CDs. Investable assets do not include your home, vehicles, or collectibles.
• EP Wealth Advisors, LLC. is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission, nor does it indicate that the advisor has attained a particular level of skill or ability.
• Hiring a qualified advisor and/or financial planner does not guarantee investment success and does not ensure that a client or prospective client will experience a higher level of performance or results. No guaranty or warranty is made so that any direct or implied results or projections being represented here will be met or sustained.
• The need for a financial advisor or financial planner and/or the type of services required are specific to the uniqueness of each individual’s circumstances. There is no guarantee or guarantee that the services offered by EP Wealth Advisors, LLC will satisfy your specific financial services requirements. Services offered by other advisors may align more to your specific needs.
• Information presented is general in nature and should not be viewed as a comprehensive analysis of the topics discussed. It is intended to serve as a tool containing general information that should assist you in the development of subsequent discussions. Content does not involve the rendering of personalized investment advice nor is it intended to supplement professional individualized advice.
• EP Wealth Advisors (“EPWA”) makes no representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information presented. All expressions of option are subject to change without notice.
• The content of this report is believed to be accurate as of the date of publication and cannot and does not accurately forecast future economic, market, or financial conditions, including changes to retirement benefits, social security, and/or Medicare. For this reason, any subsequent changes, and/or that occur after the publication of this presentation may cause the analysis encompassed herein to become inaccurate. Any references to future market or economic forecasts are based on hypothetical assumptions that may never come to pass.