The One Medicare Decision at 65 That Shapes Every Healthcare Bill After

"Medical inflation runs on its own clock, and the coverage decisions you make at 65 determine whether a serious illness costs you a manageable sum or a devastating one. Healthcare is the single most unpredictable variable in retirement planning because it combines three separate uncertainties: how fast costs will rise, how much care you will need, and which coverage structure you choose."

"Medical care costs rose 2.85% year-over-year as of January 2026, compared to general inflation of 2.16%. That gap sounds small, but compounded over 20 or 30 years it creates a cost structure that grows faster than Social Security adjustments and faster than most conservative portfolio returns. Healthcare now represents 17.1% of total personal consumption, second only to housing. From January through November 2025, healthcare spending grew 6.9% while overall consumer spending rose just 4.6%."

Medical inflation outpaces general inflation and often exceeds conservative portfolio returns, amplifying retirement healthcare costs over decades. Healthcare spending comprises about 17.1% of personal consumption and grew 6.9% from January through November 2025, versus 4.6% overall. Three uncertainties drive healthcare risk in retirement: the pace of price increases, individual care needs, and the coverage structure chosen at 65. Original Medicare (Parts A and B) has no annual out-of-pocket maximum, exposing retirees to unlimited spending during serious illness. Medicare Advantage plans provide catastrophic out-of-pocket caps but impose network limits and prior authorization requirements. Excluding long-term care, many retirees may need hundreds of thousands in after-tax savings.

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