Only 26% of U.S. adults accurately estimate Medicare covers two-thirds of retiree healthcare expenses, risking budget shortfalls.
A 2025 study reveals just 26% of Americans correctly understand Medicare covers about two-thirds of retiree healthcare costs. The remaining third includes out-of-pocket expenses like premiums, deductibles, and prescriptions, often overlooked in retirement planning.
Fidelity estimates a 65-year-old retiring today will spend $172,500 on healthcare over retirement, excluding long-term care. With healthcare inflation above 3% annually and personal savings rates at 4%, the gap in awareness poses a cash flow crisis for millions.
The TIAA Institute’s P-Fin Index survey highlights the disconnect, as 74% either overestimated Medicare’s coverage or admitted uncertainty. This misperception could lead to underfunded retirement budgets amid rising costs.