“Health care planning around age 65 is less about predicting exact costs and more about building flexibility into income, savings, and coverage decisions, so IBM employees can adapt as expenses evolve over time,” — Paul Bergeron, a representative of The Retirement Group, a division of Wealth Enhancement.

“By treating health care as a long-term planning variable rather than a fixed expense, IBM employees can make more informed decisions at age 65 that support adaptability and clarity throughout retirement,” — Tyson Mavar, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article, we will discuss:

1. How health care costs often change and expand after age 65 for IBM employees.

2. Key Medicare, savings, and income-planning considerations that can affect long-term health care expenses.

3. Practical ways to plan for rising health care costs while maintaining flexibility throughout retirement.

Turning 65 is a milestone. For many IBM employees, it represents the start of a new phase of life that may include Medicare eligibility, greater career flexibility, and new decisions around retirement timing. At the same time, health care expenses often become a more central part of long-term financial planning.

Over the coming decades, health care is widely expected to remain one of the most significant and potentially fast-rising expenses in retirement. ¹  National health spending has historically grown steadily, while individual costs can vary sharply from year to year. Planning early can help reduce uncertainty and preserve flexibility as circumstances change.

Below are several considerations worth evaluating as you approach age 65.

1. Treat Health Care as a Separate, Long-Term Expense

Broad inflation measures do not always reflect how retirees experience health care costs. National health spending has often grown faster than the overall economy, and individual expenses may change unpredictably from year to year. ²

Common drivers of change include:

• - Premium adjustments

• - Deductible resets

• - Prescription drug formulary or tier changes

• - Shifts in subsidies or employer contributions

• - New or evolving medical needs

For IBM employees transitioning into retirement, separating health care planning from other household spending can lead to more realistic expectations over time.

2. Consider the Long Term When Making Your First Medicare Decisions

Medicare elections made at age 65 can influence costs and access for many years.

Most individuals choose between two primary paths:

• - Original Medicare paired with a Medicare Supplement (Medigap) and Part D

• - Medicare Advantage plans

These options differ in how they handle premiums, provider access, and cost controls such as networks or prior authorizations.

What feels cost-effective early in retirement may work differently later, making long-term flexibility an important consideration for IBM retirees.

3. Set Aside Funds Specifically for Health Care Costs

Separating health care expenses from everyday spending—both mentally and financially—can simplify ongoing planning.

A commonly used approach is to maintain readily accessible funds equal to one year of estimated health care costs, including premiums and typical out-of-pocket expenses.

This concept aligns with long-term health care cost planning frameworks referenced by Medicare and retirement research organizations.

For IBM employees, this type of buffer can help reduce the need for abrupt changes when health care costs rise unexpectedly.

4. Use a Health Savings Account Strategically, If You Have One

If you contributed to a Health Savings Account (HSA) before enrolling in Medicare, it can remain a valuable resource in retirement.

HSA funds may generally be used tax-free for qualified medical expenses such as:

• - Medicare premiums (excluding Medigap premiums)

• - Dental and vision care

• - Hearing aids

• - Prescription medications

• - Certain long-term care insurance premiums, subject to IRS limits

Many IBM retirees choose to preserve HSA balances for later years, when health care spending often increases.

5. Plan Income Carefully to Manage Medicare Premium Surcharges

In retirement, income levels can influence Medicare premiums in addition to taxes.

Higher income may trigger Medicare Income-Related Monthly Adjustment Amounts (IRMAA), which:

• - Can increase Part B and Part D premiums

• - Typically apply for an entire calendar year once triggered

• - Are generally based on tax returns from two years prior

Large IRA withdrawals, Roth conversions, capital gains, or one-time income events can affect future premiums, making income planning an important consideration for IBM employees nearing retirement.

6. Expect Health Care to Take a Larger Share of Your Budget Over Time

As people age, health care often consumes a larger portion of household spending. ³  

At age 65, IBM retirees may benefit from identifying:

• - Which expenses could be adjusted later if health care costs increase

• - Which costs are discretionary versus essential

• - How much flexibility exists within the overall plan

Addressing these factors early can allow for gradual adjustments rather than reactive decisions later.

7. Stay Current With Preventive and Ongoing Care

Preventive care and consistent management of ongoing conditions can help reduce complications that could otherwise occur.

Helpful habits include:

• - Staying current with recommended screenings

• - Managing chronic conditions proactively

• - Taking medications as prescribed

• - Addressing concerns early rather than delaying treatment

More intensive treatments and hospitalizations are often among the most expensive and hardest health care events to anticipate for IBM retirees.

8. Review Your Health Care Plan Every Year

Health care planning requires ongoing attention throughout retirement.

Each year, it can be useful to:

• - Review Medicare coverage during the annual open enrollment period

• - Confirm prescription drug formularies and coverage

• - Reevaluate potential out-of-pocket exposure

• - Update health care-specific reserves

Regular, incremental reviews can be easier to manage than larger changes later in retirement.

The Bottom Line

Many people reaching age 65 will live well into their 80s or beyond. Over that time, health care costs are expected to remain an evolving and meaningful component of retirement planning for IBM employees.

While health care costs themselves may be unpredictable, preparation remains within your control.

Those who plan ahead, anticipate fluctuations, and remain adaptable are often better positioned to manage health care expenses throughout retirement.

How The Retirement Group Can Help

Health care planning does not occur in isolation—it intersects with income planning, tax considerations, and long-term retirement strategy. The Retirement Group works with retirees and pre-retirees to help coordinate these elements and evaluate how health care costs may influence the broader financial picture.

If you would like guidance specific to your situation, you can contact  The Retirement Group at (800) 900-5867  to discuss your retirement planning needs.

Sources:

1. “2025 Milliman Retiree Health Cost Index.”  Milliman Insight , 2 Sept. 2025,  www.milliman.com/en/insight/retiree-health-cost-index-2025 . Accessed 2 Feb. 2026.

2. “5 Retirement Expenses That Keep Climbing.”  AARP , 9 Oct. 2025,  www.aarp.org/money/retirement/prepare-for-rising-expenses/.
Accessed 2 Feb. 2026.

3. 'Health Care Costs and Affodability.' KFF, 8 Oct. 2025.  https://www.kff.org/health-costs/health-policy-101-health-care-costs-and-affordability/ . Accessed 27 Apr. 2026. 

4. “Fidelity Investments® Releases 2025 Retiree Health Care Cost Estimate—A Timely Reminder for All Generations.”  Fidelity Newsroom , 30 July 2025, newsroom.fidelity.com/pressreleases/fidelity-investments--releases-2025-retiree-health-care-cost-estimate--a-timely-reminder-for-all-gen/s/3c62e988-12e2-4dc8-afb4-f44b06c6d52e. Accessed 2 Feb. 2026. 

5. “Health Care Costs in Retirement: Are You Prepared?”  Charles Schwab , 19 Nov. 2025, www.schwab.com/learn/story/health-care-costs-retirement-are-you-prepared.  Accessed 2 Feb. 2026.