List prices for the top 25 prescription drugs covered by Medicare Part D have nearly doubled, on average, since they were first brought to market, according to a new AARP report.

Moreover, that price growth has often exceeded the rate of inflation, according to the interest group representing Americans ages 50 and over.

The analysis comes as Medicare now has the ability to negotiate prescription drug costs after the Inflation Reduction Act was signed into law by President Joe Biden in 2022.

Notably, only certain drugs are eligible for those price negotiations.

The Biden administration in August released a list of the first 10 drugs to be included, which may prompt an estimated $6 billion in net savings for Medicare in 2026.

Another list of 15 Part D drugs selected for negotiation for 2027 is set to be announced by Feb. 1 by the Centers for Medicare and Medicaid Services.

AARP studied the top 25 Part D drugs as of 2022 that are not currently subject to Medicare price negotiation. However, there is a “pretty strong likelihood” at least some of the drugs on that list may be selected in the second line of negotiation, according to Leigh Purvis, prescription drug policy principal at AARP.

Those 25 drugs have increased by an average of 98%, or nearly doubled, since they entered the market, the research found, with lifetime price increases ranging from 0% to 293%.

Price increases that took place after the drugs began selling on the market were responsible for a “substantial portion” of the current list prices, AARP found.

The top 25 treatments have been on the market for an average of 11 years, with timelines ranging from five to 28 years.

The findings highlight the importance of allowing Medicare to negotiate drug prices, as well as having a mechanism to discourage annual price increases, Purvis said. Under the Inflation Reduction Act, drug companies will also be penalized for price increases that exceed inflation.

Notably, a new $2,000 annual cap on out-of-pocket Part D prescription drug costs goes into effect this year. Beneficiaries will also have the option of spreading out those costs over the course of the year, rather than paying all at once. Insulin has also been capped at $35 per month for Medicare beneficiaries.

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Those caps help people who were previously spending upwards of $10,000 per year on their cost sharing of Part D prescription drugs, according to Purvis.

“The fact that there’s now a limit is incredibly important for them, but then also really important for everyone,” Purvis said. “Because everyone is just one very expensive prescription away from needing that out-of-pocket cap.”

The new law also expands an extra help program for Part D beneficiaries with low incomes.

“We do hear about people having to choose between splitting their pills to make them last longer, or between groceries and filling a prescription,” said Natalie Kean, director of federal health advocacy at Justice in Aging.

“The pressure of costs and prescription drugs is real, and especially for people with low incomes, who are trying to just meet their day-to-day needs,” Kean said.

As the new changes go into effect, retirees should notice tangible differences when they’re filling their prescriptions, she said.

Many Americans are anxious and confused when it comes to saving for retirement.

One of those pain points: How much should households be setting aside to give themselves a good chance at financial security in older age?

More than half of Americans lack confidence in their ability to retire when they want and to sustain a comfortable life, according to a 2024 poll by the Bipartisan Policy Center.

It’s easy to see why people are unsure of themselves: Retirement savings is an inexact science.

“It’s really a hard question to answer,” said Philip Chao, a certified financial planner and founder of Experiential Wealth, based in Cabin John, Maryland.

“Everyone’s answer is different,” Chao said. “There is no magic number.”

Why?

Savings rates change from person to person based on factors such as income and when they started saving. It’s also inherently impossible for anyone to know when they’ll stop working, how long they’ll live, or how financial conditions may evolve — all of which impact the value of one’s nest egg and how long it must last.

That said, there are guideposts and truisms that will give many savers a good shot at getting it right, experts said.

The percentage is a share of savers’ annual income before taxes. It includes any money workers might get from a company 401(k) match.

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Those with lower earnings — say, less than $50,000 a year — can probably save less, perhaps around 10%, Blanchett said, as a rough approximation.

Conversely, higher earners — perhaps those who make more than $200,000 a year — may need to save closer to 20%, he said.

These disparities are due to the progressive nature of Social Security. Benefits generally account for a bigger chunk of lower earners’ retirement income relative to higher earners. Those with higher salaries must save more to compensate.

“If I make $5 million, I don’t really care about Social Security, because it won’t really make a dent,” Chao said.

Of that, about 45 percentage points would come from savings, Fidelity wrote in an October analysis.

To get there, people should save 15% a year from age 25 to 67, the firm estimates. The rate may be lower for those with a pension, it said.

The savings rate also rises for those who start later: Someone who starts saving at 35 years old would need to save 23% a year, for example, Fidelity estimates.

1. “Start early and save often,” Chao said. “That’s the main thing.” This helps build a savings habit and gives more time for investments to grow, experts said.
2. “If you can’t save 15%, then save 5%, save whatever you can — even 1% — so you get in the habit of knowing you need to put money away,” Blanchett said. “Start when you can, where you can.”
3. Every time you get a raise, save at least a portion instead of spending it all. Blanchett recommends setting aside at least a quarter of each raise. Otherwise, your savings rate will lag your more expensive lifestyle.
4. Many people invest too conservatively, Chao said. Investors need an adequate mix of assets such as stocks and bonds to ensure investments grow adequately over decades. Target-date funds aren’t optimal for everyone, but provide a “pretty good” asset allocation for most savers, Blanchett said.
5. Save for retirement in a tax-advantaged account like a 401(k) plan or an individual retirement account, rather than a taxable brokerage account, if possible. The latter will generally erode more savings due to taxes, Blanchett said.
6. Delaying retirement is “the silver bullet” to make your retirement savings last longer, Blanchett said. One caution: Workers can’t always count on this option being available.
7. Don’t forget about “vesting” rules for your 401(k) match. You may not be entitled to that money until after a few years of service.

The fourth-quarter estimated tax deadline for 2024 is Jan. 15, and missing a payment could trigger “unexpected penalties and fees” when filing your return, according to the IRS.

Typically, estimated taxes apply to income without withholdings, such as earnings from freelance work, a small business or investments. But you could still owe taxes for full-time or retirement income if you didn’t withhold enough.

You could also owe fourth-quarter taxes for year-end bonuses, stock dividends, capital gains from mutual fund payouts or profits from crypto sales and more, the IRS said.    

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Federal income taxes are “pay as you go,” meaning the IRS expects payments throughout the year as you make income, said certified public accountant Brian Long, senior tax advisor at Wealth Enhancement in Minneapolis. 

If you miss the Jan. 15 deadline, you may incur an interest-based penalty based on the current interest rate and how much you should have paid. That penalty compounds daily.

Tax withholdings, estimated payments or a combination of the two, can “help avoid a surprise tax bill at tax time,” according to the IRS.

The threshold increases to 110% if your 2023 adjusted gross income was $150,000 or higher, which you can find on line 11 of Form 1040 from your 2023 tax return.

However, you could still owe taxes for 2024 if you make more than expected and don’t adjust your tax payments.

“The good thing about this last quarterly payment is that most individuals should have their year-end numbers finalized,” said Sheneya Wilson, a CPA and founder of Fola Financial in New York.