Medicare is a federal health insurance program for people age 65 and older, as well as certain younger individuals with disabilities. It is made up of different parts, including Part A (hospital insurance) and Part B (medical insurance), which together are known as Original Medicare. Seniors can then choose additional coverage through Medicare Advantage plans or Medicare Supplement (Medigap) plans to help cover costs like copays, deductibles, and prescription drugs.

Medicaid is a state and federally funded health insurance program that helps people with limited income and assets pay for medical care and long-term services. It can cover doctor visits, hospital care, prescription drugs, and in many cases long-term care such as nursing homes, assisted living, and in-home services. Medicaid rules vary by state, and some seniors qualify for both Medicare and Medicaid, which can significantly reduce out-of-pocket healthcare costs.

The cost of Medicare depends on the parts you choose and your income level. Most people pay nothing for Part A (hospital coverage) because they paid Medicare taxes while working. Part B (medical coverage) has a monthly premium, which is usually deducted from Social Security, and an annual deductible. Additional costs vary depending on whether you choose a Medicare Advantage plan or a Medicare Supplement plan, and higher-income individuals may pay more due to income-related adjustments.

Whether you can afford to retire depends on your monthly expenses, guaranteed income, and how long your savings need to last. Most retirees rely on a combination of Social Security, pensions (if available), and personal savings to cover the gap between what they spend and what guaranteed income provides. A simple way to start is to compare your monthly expenses to your expected Social Security income and see how much must come from savings. Reviewing this early allows you to adjust your plans, timing, or lifestyle before retirement.