Rising Health Costs Reframe Retirement Plans as Withdrawals Fall to About 2%

Overview

• The average household headed by someone 65 or older spent just over $61,400 in 2024, with housing at about 36% of budgets and transportation, health care, and food each around the mid‑teens.
• At that spending level, the 4% rule implies roughly $1.5 million is needed, yet surveys show Americans target about $1.26 million, highlighting a shortfall against actual costs.
• Fidelity estimates a 65‑year‑old needs about $172,500 for healthcare in retirement excluding long‑term care, a figure that can climb with complex medical needs.
• Long‑term care remains the swing factor, with 2024 averages near $10,646 per month for a private nursing home room and $5,900 for assisted living, alongside data showing many older adults will need some form of care.
• A 2025 study found married retirees withdraw about 2.1% of savings annually and singles 1.9%, and experts point to steps to curb medical spending such as maximizing HSAs, choosing the right Medicare coverage, and reviewing plans each year.