Medical inflation

General consumer inflation in India has typically run in the mid-single digits in recent years. Private healthcare costs have risen meaningfully faster — commonly cited estimates put medical inflation around 12-14% annually, driven by rising hospital, diagnostic, and treatment costs that outpace the broader consumer price basket.

That gap compounds into something significant over a multi-decade retirement. An expense that costs 8 lakh today, growing at general inflation of 6%, costs roughly 34 lakh in 25 years. The same expense growing at 12% medical inflation costs closer to 1.4 crore over the same period — more than four times as much, purely from the faster compounding rate.

Healthcare spending also isn't evenly spread across retirement — it tends to be a small share of spending early on and a much larger share later, exactly when a portfolio has had the most time to be drawn down. A plan that applies one blended inflation rate to all spending can understate this late-life cost significantly.

That's why the Retirement Planner splits spending into a regular bucket and a separate medical bucket, each with its own inflation rate, rather than applying a single inflation assumption to everything — and why the Health Cover Adequacy Calculator exists specifically to show how a fixed insurance sum insured loses real value against this faster-growing cost over time.