The Healthcare Gap: The FIRE Problem Nobody Budgets For

In short: If you retire early in the US, you must self-fund health insurance from your retirement date until Medicare starts at 65 — potentially a decade or more. This "bridge" can run into five figures a year per person, and healthcare costs have historically risen faster than general inflation, so it's a line item that grows quicker than the rest of your budget. Build it into your number with the FIRE calculator and the retirement corpus calculator.

Why the Gap Exists

In the US, subsidised employer health cover ends when you stop working, but Medicare doesn't begin until 65. Retire at 50 and you have 15 years to bridge on your own — via the ACA marketplace, a spouse's plan, or paying full freight. The cost depends heavily on your taxable income in retirement, because marketplace subsidies phase out as income rises.

Early retirement doesn't just need a bigger pot — it needs a dedicated, faster-inflating healthcare line.

The Inflation Twist

Most retirement plans apply one inflation rate to everything. But medical costs have long outpaced headline inflation. If your general budget grows at 3% but healthcare grows faster, a bridge that looks affordable at 50 can balloon by 60. Modelling healthcare at the same rate as groceries understates the corpus you need. Convert future medical costs to today's money with the inflation calculator.

A Worked Example

Common Mistakes

Forgetting the subsidy cliff.

Because ACA subsidies depend on income, drawing too much from taxable accounts in a given year can slash your subsidy and spike your premium. Retirement withdrawal strategy and healthcare cost are linked.

Using one inflation rate for everything.

Healthcare deserves its own, higher assumption. Stress-test the corpus with the Coast FIRE calculator to see how sensitive your date is.

Your Next Decision

Add an explicit healthcare-bridge line to your FIRE plan: estimated annual premium × years to 65, grown at a healthcare-specific inflation rate, in today's money. Then re-check your date with the FIRE calculator.