Six in 10 Americans worry they will be unable to afford health care in retirement, according to the 2026 Annual Retirement Study from the Allianz Center for the Future of Retirement, part of Allianz Life Insurance Company of North America, Minneapolis.
The survey, conducted in January 2026 with 1,000 respondents aged 25 and older, found anxiety running especially high among Gen X: 76 percent of that cohort expressed concern about health care affordability, compared with 60 percent of millennials and 56 percent of boomers.
The data lands at a moment when the math on retirement health care has never looked more daunting. Fidelity Investments projected in July 2026 that Americans retiring this year will spend an average of $185,000 on medical costs over the course of their retirement - a figure that accounts for Medicare Parts A, B, and D but excludes long-term care.
The HealthView Services 2026 Retirement Healthcare Costs Data Report estimated long-term health care inflation at 5.8 percent annually, well ahead of the 2.4 percent Social Security cost-of-living adjustment projected for the same period.
Long-term care is its own pressure point. The Allianz Life study found 62 percent of Americans worry they cannot afford long-term care costs, while 60 percent are unsure Medicare will remain available for the entirety of their retirement.
The more troubling finding in the Allianz Life data may not be the anxiety itself, but what's driving it: widespread and consequential misunderstanding of what Medicare actually covers.
Roughly one in three respondents (34 percent) incorrectly believed Medicare covers long-term care services. It does not. More than a third (37 percent) said Medicare is guaranteed available at retirement, when in fact eligibility begins at age 65, meaning clients who retire earlier face a coverage gap that needs to be planned for.
Two in five (43 percent) believed prescription drugs are covered under Medicare's standard plan, when Original Medicare requires a separate Part D enrollment. One in four (23 percent) thought Medicare is free, when the program carries premiums, deductibles, and out-of-pocket expenses that vary by income and work history.
These knowledge gaps translate directly into undersaving. According to separate research from Fidelity Investments, 54 percent of pre-retirees incorrectly believe Medicare will cover all of their health care expenses in retirement - a misconception that, left uncorrected, can expose clients to tens of thousands of dollars in unplanned costs.
"Health care is one of a retiree's largest ongoing expenses, and many Americans don't realize that Medicare won't cover everything, especially long-term care," said Kelly LaVigne, VP of consumer insights at Allianz Life. "That knowledge gap can leave retirees paying more out of pocket than anticipated. Understanding what Medicare does and doesn't pay for is an important part of building a retirement strategy."
For financial advisors, the data presents both a planning challenge and a clear opportunity to differentiate. Fifty-five percent of survey respondents worry about navigating Medicare and making the right coverage choices - signaling that clients are actively seeking guidance on this terrain.
Health care spending per person aged 65 and older is more than double that of working-age adults, according to the U.S. Centers for Medicare & Medicaid Services, and the agency's National Health Expenditures data projects that growth in health spending will outpace GDP growth from 2025 to 2034. That structural pressure makes health care cost planning a core element of any retirement income strategy, not an afterthought.
One approach gaining traction is anchoring essential retirement expenses including health care to guaranteed income sources. Annuities, alongside Social Security, can provide a predictable income floor that insulates clients from the dual risks of market volatility and spending down savings too quickly.
LaVigne pointed to the role advisors play in closing the Medicare knowledge gap. "A financial professional can help build a strategy that addresses health care costs alongside other retirement risks like inflation and market volatility," she said.
With health care spending projected to remain one of the largest and least predictable expenses in retirement, advisors who can speak fluently to Medicare structure, long-term care options, and income protection strategies are positioned to offer something clients demonstrably need.
New research exposes a wide gap in how affluent parents and their adult children understand and prepare for the transfer of family wealth.
A new AIC report finds a 13.2% median annualized return over 10 years, outpacing public equities, real estate, and fixed income.
New H&W data reveals $102.4 trillion in household investable assets, with taxable accounts outpacing retirement savings growth.
Betterment’s Devon Klumb built and sold an RIA - now he’s telling advisors what he wished he’d known sooner.
New UMA, direct indexing and asset location capabilities aim to cut manual work for advisors managing personalized portfolios.
Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.
As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor
