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Despite tariff fears and recession warnings, the world’s top entrepreneurs are more optimistic than ever — and quietly preparing for the biggest wealth transfer in a generation. Their response? A collective shrug and a focused plan to cash in big over the next decade.

According to the newly released 2026 UBS Global Entrepreneur Report, the world’s most successful business founders are fiercely optimistic, planning massive workforce expansions, and, most notably, preparing for highly lucrative business exits.

The report, which surveyed 215 elite founders boasting a combined $34.3 billion in annual revenue, paints a picture of a business class pretty much unfazed by macroeconomic headwinds. A striking 68% of entrepreneurs say they are optimistic about their business prospects over the next 12 months. This confidence is highest in Switzerland (83%) and Europe (74%), driven primarily by surging customer demand and rapid technological advancements.

Benjamin Cavalli, Head of Strategic Clients & Global Connectivity at UBS, noted that founders are refusing to retreat. “Entrepreneurs are not preparing for retrenchment. They’re preparing for reinvention,” he observed, adding that they are entering the year with “remarkable resilience”.

80% Plan to Expand Headcount in Five Years

Instead of pulling back, founders are doubling down on growth. Over the next five years, 80% of entrepreneurs globally expect to increase their workforce, with 37% intending to do so significantly. Furthermore, 45% are eyeing international expansion or relocation to capture new customer markets. To drive efficiency and improve margins, they are enthusiastically embracing artificial intelligence, with 61% viewing AI as their greatest commercial technology opportunity. While they do acknowledge risks—such as political instability (42%) and the threat of major geopolitical conflicts (35%)—they are actively mitigating these threats by boosting operational efficiency and diversifying their markets rather than hitting the brakes.

But perhaps the most revealing takeaway from the 2026 report is what comes next: the great wealth transfer. Having successfully navigated a turbulent economic landscape, a massive wave of founders is preparing to sell.

The $34 Billion Exit Wave: Why Founders Are Finally Cashing Out

Nearly a third (32%) of global entrepreneurs are actively considering exiting their businesses within the next five years. For those aged 65 and over, this figure surges to 57%. American entrepreneurs are leading this stampede to the bank, with a staggering 63% planning an exit, significantly outpacing their peers in Europe (38%) and Asia-Pacific (18%).

When they do cash out, they are looking for the highest bidder. Forty percent of exiting founders expect to sell to a strategic buyer within their industry, a move often motivated by the higher valuations that corporate synergies can justify. Only 23% plan to hand the operating business down to the next generation, and a mere 6% envision an IPO.

This impending wave of sales is driven by a stark realization among founders: they have neglected their own bank accounts. Nearly a third (32%) of those surveyed admit they have not built up their personal wealth as much as they could have, having continually reinvested their capital back into corporate growth. In the US, nearly half (47%) report this personal wealth gap.

However, the tide is turning. Globally, 42% of these business-first founders say their primary focus will shift to building their personal fortunes immediately following a sale. As they prepare for this windfall, their anxieties are shifting from corporate strategy to personal legacy. Two-thirds (67%) are prioritizing how to help their heirs manage this impending wealth responsibly, while 61% are hyper-focused on the tax efficiency of transferring their assets.

With their eyes firmly fixed on lucrative sales and wealth management, the world’s entrepreneurs are confidently ignoring today’s economic noise, preparing to trade their boardrooms for a well-earned, massive payday.

A Different Picture on Main Street

Not everyone is feeling the same optimism. The National Federation of Independent Business’s Small Business Optimism Index fell for the second consecutive month in February, slipping 0.5 points to 98.8, as expected real sales volumes dropped 8 points to a net 8% — the weakest reading in nearly a year. Hiring plans fell to their lowest level since May, and taxes remained the top concern for the third straight month.

The divergence between the UBS and NFIB findings reflects a structural split in the American business landscape. The entrepreneurs UBS surveyed have the capital and scale to relocate, diversify, and invest in AI. The small business owners the NFIB tracks are navigating tariff uncertainty, labor shortages, and competition from the very large businesses that are deploying those tools. “High sales and increased profits made February a more positive month for many owners,” said NFIB Chief Economist Bill Dunkelberg, “but competition from large businesses is putting stress on Main Street firms as they navigate the current economic climate.”

The March NFIB survey will be the first to capture small business sentiment after rising energy prices linked to the Iran War — adding yet another variable to an already fragile outlook for the businesses least equipped to absorb it.

For this story, Fortune journalists used generative AI as a research tool. An editor verified the accuracy of the information before publishing.

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Bill Ackman has never been one to temper his ambitions, but by filing to take Pershing Square public, he may have taken the first step toward reaching his biggest goal yet—to create his own “modern-day” Berkshire Hathaway by following in the footsteps of one of the world’s most successful investors, Warren Buffett.

Pershing Square Capital Management on Tuesday filed to be listed on the New York Stock Exchange, Ackman’s second attempt to take the company public after an ambitious play to raise $25 billion for the largest closed-end fund IPO in history failed in 2024.

This time around, Ackman lowered his target, aiming to raise between $5 and $10 billion. He’s also revamped his approach as he’ll aim to list both the closed-end fund and Pershing Square’s parent company—which will use the ticker PSUS and PS respectively. To encourage investors, every 100 shares of the closed fund that investors buy will automatically give them 20 free shares of Pershing Square Capital Management. According to the Wall Street Journal, the minimum order size is a relatively accessible $5,000.

Through this approach, Ackman seeks to replicate Buffett’s success with Berkshire by gaining access to “permanent capital,” potentially through investors drawn to his fiery, and sometimes controversial, posts on X, where he has two million followers. While Pershing already has a similar dual listing that trades on European markets, the U.S. listing would give him better access to deep-pocketed U.S. investors.

For Ackman personally, this is one of the ways he can follow in his [unofficial] mentor’s shoes.

“I’ve been a kind of Warren Buffett devotee, unofficial—he’s been my unofficial mentor for many years,” said Ackman in 2023.

Ackman channels the Buffett playbook

Traditional hedge funds like Pershing Square allow investors to pull out their money either quarterly or annually. Therefore, fund managers need to keep cash on hand and may have to sell holdings in case their investors flee. 

Through the dual listing, Pershing will instead have access to capital in its closed-end fund that can’t be directly revoked; investors have to sell their shares on the open market instead.

With this move, Ackman is directly channeling the Buffett playbook. Permanent capital—the kind Buffett perfected at Berkshire—has no expiration date, no forced exits, and no investors waiting for a check. Think of it as the Buffett model: raise capital once, hold forever, and let compounding do the rest.

Although Buffett didn’t start Berkshire—which he bought in the 1960s while he was a struggling textile maker—the legendary investor leveraged this “permanent capital” to transform the conglomerate that now owns Geico Insurance, ice cream chain Dairy Queen, and BNSF railway, into the most valuable financial institution in the world, with a $1 trillion market cap.

“The access to the permanency of that capital gave him the ability to take a—kind of a very long-term view in a world where people in the investment management business generally have to make short-term decisions because their capital, you know, it can leave,” said Ackman about Buffett’s strategy during a 2023 CNBC conference.

Pershing’s IPO will give it a leg up on hedge funds focusing on the short term, Ackman wrote in a letter to investors as part of the filing, the Wall Street Journal reported.

“Competing against investment managers with short-term capital is an important long-term, sustainable competitive advantage for Pershing Square, particularly in a world where a seemingly ever-increasing proportion of capital is managed with shorter-term investment objectives,” Ackman wrote in the filing.

Ackman has previously tried to pursue his dream of building a Berkshire copycat through a bet on real estate developer Howard Hughes Holdings (HHH). When he announced the play in a post on X last year, he described the deal as “a modern-day version of Berkshire.”

Yet it’s unclear how that bet will pan out. After Howard Hughes’ board rejected his first offer, Pershing in May handed over $900 million for newly issued shares that gave it a controlling stake, and Ackman was named executive chairman. Yet, a group of HHH shareholders sued Ackman last month, alleging the deal was done at an “unfair price,” Bloomberg reported.

Ackman’s “unofficial mentor”

From a young age, Ackman aimed high. He graduated magna cum laude from Harvard in 1988 and then earned an MBA from Harvard Business School. Soon after graduating he created his own hedge fund with a fellow Harvard graduate that only had $3 million under management and grew to some success before collapsing in the early 2000s.

Yet, Ackman was able to rebound from that failure to create his own hedge fund, Pershing Square, which grew an original $54 million seed investment into a firm that today boasts $28 billion in assets under management.

Along the way, Ackman has said a significant amount of his inspiration has come from Buffett. Speaking at a CNBC conference in 2023, Ackman described the similarities in both their careers, noting that before Buffett transformed a struggling textile company into what would later become the $1 trillion conglomerate Berkshire Hathaway, he was essentially an activist investor like Ackman, “running a series of private partnerships.”

In fact, Ackman in an X post last year credited reading one of Buffett’s famous annual shareholder letters as the reason he chose to become an investor. 

When he started his first hedge fund at 26, Ackman wrote, “I thought that perhaps some day I could build a diversified holding company like Berkshire with an extraordinary long-term record.”

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China’s near‑monopoly over rare earth processing has turned a once‑obscure corner of mining into a frontline of geopolitical competition, forcing the U.S. and its allies into a costly race to catch up.

“Clearly, China is the leader, and the U.S. is far behind,” veteran mining executive Mick McMullen told Fortune on March 10, at the sidelines of the U.S. Capital Access Forum in Singapore, organized by business advisory firm Hall Chadwick. “It’s a bit unbelievable that it’s taken so long for everyone to realize that maybe we should have some of these things in house.”

China accounts for roughly 70% of global rare earth production, but it is the country’s dominance in processing that gives Beijing real leverage. With close to 90% of the world’s rare earth refining and processing capacity, China effectively controls the flow of materials used in products ranging from electric vehicles and wind turbines to advanced semiconductors and precision‑guided munitions.

Since the 1980s, China has shelled out billions of dollars in investment and subsidies to secure its dominant position across the supply chain of rare earth metals. “China has been at this for more than 30 years,” McMullen said.

The country’s dominance of rare earth production made headlines last year after Beijing slapped export controls on several key metals in retaliation to U.S. President Donald Trump’s tariffs on China. Beijing imposed restrictions on the sale of elements like samarium, dysprosium and terbium, which are crucial for defense, electric vehicle and semiconductor industries. 

Key industries like the auto sector worried that they’d run out of necessary components in a matter of weeks, effectively halting production. China later suspended several of these export controls as part of a tariff truce with Trump last November. 

But 2025 wasn’t the first time that China tried to leverage rare earths as part of its diplomacy. “Japan has had multiple occasions where China turned the taps of rare earth off,” McMullen explained. 

In 2010, following a maritime diplomatic dispute over disputed islands in the East China Sea, China halted rare earth exports to Japan for two months, choking industries that relied on high-tech manufacturing materials. And earlier this year, China tightened Japan export restrictions on rare earths like gallium, germanium and graphite, following comments on Taiwan by Japanese Prime Minister Sanae Takaichi.

How countries are reacting

Governments were already trying to diversify their sources of rare earths before China’s export controls last year. In 2024, the EU passed the European Critical Raw Materials Act, which set 2030 benchmarks for the bloc to meet 10% of its annual consumption from domestic extraction, 40% from domestic processing and 25% from recycling of critical raw materials, including rare earths.

China’s export controls on rare earths have accelerated a global push to build up alternate sources of rare earths. Countries like Australia, Canada, Japan and France are investing heavily into processing technology and infrastructure. 

Last October, the U.S. inked an $8.5 billion rare earth pact with Australia and two deals with the Southeast Asian nations of Malaysia and Thailand, in a bid to help American manufacturers diversify their supply of critical minerals. 

Industry leaders, too, recognize the importance of investing into downstream processing.

“Everybody focuses on where the resources are, and how we are going to secure them,” Dulguun Erdenebaatar, the CEO of Singapore-based Boroo Mining Company, told Fortune. “But the processing capabilities are very important to unlock supply chain constraints internationally.”

Yet, experts argue that the world will likely remain reliant on China for critical minerals for the foreseeable future, and it may be years till other nations catch up.

“The processing process requires specialized technology, which China currently controls,” McMullen explains. “There is rare earth processing capacity elsewhere in countries like South Korea—and they have some good technology—but it’s all pretty small-scale for now.”

It could, optimistically, take countries a decade to build their own rare earth industry. “I’m not sure how long it takes to solve it, and whether it can get done in one administration term,” McMullen says. “The rest of Asia probably just has to keep taking it off China for now.”

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Israeli President Isaac Herzog spoke Wednesday to a group of business leaders gathered in Washington at the Yale CEO Caucus. While discussions during the gathering were off the record, Herzog made his virtual remarks on the record. His main message was to convey a sense of regional solidarity around the U.S.-Israeli attacks on Iran and what he described as the “NATO-like” response of Gulf neighbors to Iran’s widespread retaliatory bombing, while characterizing the offensive as a prerequisite for Middle East prosperity.

Herzog also spoke glowingly of America’s role as a partner, saying “the incredible cooperation that we have between our militaries is unprecedented, compared even to some of the alignment of the allies in WWII.” While the president acknowledged the cost and controversy around the military strikes, which killed Iranian Supreme Leader Ayatollah Ali Khamenei, he underscored the urgency of the situation.

“Iran was recharging and reigniting its program, its nuclear program, in clandestine new sites that were extremely sensitive, and we could have missed the opportunity of taking care of them,” he said, adding that “Iran was rushing a plan of 20,000 ballistic missiles. They had 2,000 at the opening of this operation. Twenty thousand would have made a sea change of their power in the region for generation or so.”

As U.S. President Donald Trump has done, Herzog also pointed to Iran’s recent nationwide protests and the regime’s mass killings in response as a further justification for the attacks. “Two months ago, they butchered 50,000 of their people,” Herzog said. (Iran put the death toll at between 3,117 and “several thousand,” while groups like Human Rights Watch say the toll is hard to calculate amid a government crackdown and now the war.) Added Herzog: “We also are hurting the government/military infrastructure substantially to enable the people to rise up. We don’t know if they will.”

Attendees asked Herzog about the allies’ long-term plan for Iran and criticism that the attacks were launched without one. “The grand plan is first and foremost to weaken them substantially, and that is what is being done,” he said, arguing that Iran’s “grand master plan” was a threat beyond the region. “Every American leader, every European leader, was talking to us about Iran. We understood that it’s a cocktail of extreme ideology, jihadist ideology, that does not accommodate moderate Islam, Christianity, Judaism, or anybody else.”

A Plan For Prosperity

The main message for CEOs, though, was that Tehran had been undermining an increasing spirit of cooperation throughout the Gulf region and beyond. “The real next big horizon in business is the connectivity between Israel and India through Saudi Arabia and the Gulf,” he said, referring to the India-Middle East-Europe Economic Corridor, or IMEC, that was announced during the G20 Summit in New Delhi in September 2023. Weeks later, on October 7, Iranian-backed Hamas terrorists murdered more than 1,200 civilians in Israel and took more than 250 hostages, sparking a war with Gaza that’s killed more than 70,000 people, primarily Palestinians. That has slowed but not halted progress on the bold initiative to integrate energy, transportation and digital infrastructure across the continents.

Prior to the “watershed moment” of October 7, he said, about a million and a half Israelis had been working throughout the region, primarily in UAE and Bahrain—the first signatories to the Abraham Accords, a deal to normalize relations between Gulf nations and Israel that was negotiated under the first Trump Administration in September of 2020. Sudan and Morocco later signed on to the accord and Saudi Arabia had expressed interest in joining. Now, those aspirations for a regional bloc of cooperation are on hold, and Herzog largely blames Tehran. “We need to be steadfast, take a deep breath and finish the undermining of Iran.”

The Israeli president acknowledged polls that show a growing number of Americans becoming less supportive of Israel amid ongoing violence in the Middle East, calling it a “very big strategic issue” that’s not unique to Israel.  “Every nation is going to social evolution. There are changes, especially changes with the young generation,” said Herzog, who’s seen to have a tense working relationship with Prime Minister Netanyahu. “Israel is going through an election in about six months’ time. We’re a democracy. We feel and are confident that we are doing the right thing.”

On America’s role, he’s clear: “If you are the biggest empire in the world, there’s many advantages but also certain obligations that you’re meeting by fighting the empire of evil.”

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When Iranian missiles shut down Gulf airspace, several professional golfers bound for LIV Golf’s Hong Kong tournament found themselves stuck in Dubai. 

In all, eight LIV players, three broadcasters, four caddies and several family members were stuck in the Middle East, LIV Golf CEO Scott O’Neil recounted to Fortune on March 9, the third day of the four-day contest in Hong Kong. 

“Events like this can be a bit stressful because the only thing we’re focusing on is our sole focus is making sure the players, the caddies, the broadcasters and their families are safe” LIV Golf CEO Scott O’Neil told Fortune on March 9, the third day of the four-day contest in Hong Kong. 

Stranded golfers ended up making a mad dash to Oman and golfer Jon Rahm’s private jet to get them to LIV Golf Hong Kong, and made it to Hong Kong in time. (Oman has become a popular exit for expats fleeing the Gulf; on March 9, Muscat’s airport limited access to private jets to ensure space for commercial and government flights).

“We experience our fair share of challenges as the geopolitical world reveals itself. We always think first and foremost about safety,” O’Neil said, crediting “precise planning, excellent resources and tremendous leadership, particularly from Jon Rahm and [general manager] Jeff Koski,” in getting the golfers out of the conflict zone and to Hong Kong on time. 

LIV’s Hong Kong tournament, held at the 137-year-old Hong Kong Golf Club at Fanling near the border with mainland China, looked different from a traditional golf tournament. DJ sets and chef-led cooking demos sit alongside the competition, part of LIV’s “golf for everyone” push. O’Neil noted that 30% of LIV’s Hong Kong attendees had never been to a golf tournament before.

O’Neil took over as LIV’s CEO in early 2025, succeeding Hall-of-Famer Greg Norman, who launched the breakaway league in 2021. O’Neil is a career sports executive, running properties like Madison Square Garden, the Philadelphia 76ers and the New Jersey Devils, and most recently served as CEO of Merlin Entertainments, operator of the Legoland resorts, before joining LIV.

LIV Golf, backed by Saudi Arabia’s Public Investment Fund, burst onto the scene promising to disrupt men’s professional golf with the slogan “Golf, but Louder.” The league lured stars such as Rahm, Bryson DeChambeau and Brooks Koepka with large guaranteed contracts and pitched a shorter, more broadcast-friendly format built around both individual and team competitions.

The golf upstart still has a long way to go until it’s financially sustainable. LIV Golf’s UK arm, which oversees non-U.S. operations, reported a $462 million loss in 2024, bringing cumulative losses since 2022 to more than $1.1 billion, according to filings. A proposed merger between the PGA Tour and LIV, announced in 2023, has stalled.

“It’s an early-stage business,” O’Neil said. “If you talk to any of the executives here, you’ll find us walking with a quiet confidence.” He added that overall revenue has doubled, ticket revenue is up about 80% year-on-year, and that LIV’s tournaments were responsible for over $1 billion in economic impact worldwide. 

Saudi Arabia has pulled back on some of its most ambitious projects, and the Iran war could tighten Riyadh’s wallet. The PIF has committed over $5 billion to LIV. Yet O’Neil is optimistic about PIF’s involvement, saying LIV feels “appreciated, loved and supported,” describing the experience as “quite a journey to be with extraordinary investors who have a long-term approach to business.”

The PGA Tour has responded to the new competition by creating pathways for LIV players to return, rolling out new high-purse “signature” events, and pushing harder into Asian markets. It also installed a new chief executive, Brian Rolapp, in June. That pushed LIV to respond in turn: the league ended up tweaking its format to allow players to qualify for golf’s major championships, narrowing one of its key differentiators. 

LIV is borrowing a page from U.S. team sports to narrow the gap with PGA. Each team operates as a quasi-franchise with its own branding and commercial rights; team captains can hold equity in the teams and seek their own sponsors. O’Neil confirmed to Fortune that Citi has been hired to help LIV sell minority equity stakes in its teams.

O’Neil—who called LIV the “F1 of golf”—believes the league can carve out a global niche. “The PGA Tour is in America, and they do a wonderful job there,” he said. “There are also more than 100 million golfers outside the U.S., and that’s the market we’re interested in.” LIV already stages events in South Korea and Australia, and O’Neil singled out mainland China and Japan as priority markets.

“There’s plenty of room for everyone,” he said.

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On February 11, the Congressional Budget Office released its closely-watched, 10-year projections for the U.S. budget, this addition covering FYs 2026 to 2035. As expected, the numbers were extremely dire, positing deficits and debt that by the decade’s close respectively each 6.5% of GDP and 120% of GDP. The sundry economists and think tanks that evaluated the numbers, and members of Congress on both sides of the aisle, called the forecast extremely dire and our current course unsustainable. The trend sounding the loudest alarm: An explosion in interest costs that even today account for almost one-fifth of all U.S. spending.

Then came the war in Iran.

The conflict is pushing the accelerator on a train that already risked hopping the tracks. Though the conflict’s costs over its first ten days are immense, the budget burden would be relatively light were it to end in, say, the next few days, or a week. In his Florida press conference on March 9th, President Trump avowed that “the war is very complete” and stop conclude “soon.” But should the the U.S. and Israel’s joint campaign to crush Iran’s nuclear program and crush its capacity to fire ballistic missiles and “kamikaze” drones drag on for even several more weeks, the damage to America’s fragile finances will prove substantial. Especially when you add a second blow that fell a week before the onslaught on Iran—the probable lost revenue arising from the Supreme Court’s decision to scotch the Trump tariffs.

The staggering costs for the early days are in, and now the bill is mounting at nearly $1 billion a day

In one of the earliest estimates, the Center for Strategic and International Studies reckoned that the U.S. in the war’s first 100 hours spent a total of $3.7 billion, including $3.1 billion on replacing munitions—and that 95% of that number wasn’t budgeted, hence amounting to an added expense for taxpayers. But on March 5th, Congressional sources told MS Now that the Pentagon put the number for the first 48 hours at $5.6 billion, a bill that covered only munitions replacement and didn’t include the operating costs for the likes of aircraft and destroyers. Using the CSIS analysis, it would appear that the additional costs reached several hundred million dollars.

Ken Smutters, faculty director of the Penn Wharton Budget Model, told CNN that daily costs fell substantially following the initial shock and awe. He forecasts that the meter is now running at roughly $800 million a day. Other estimates, including that advanced by John Phillips, a British safety, security and risk advisor, put the daily tab at $1 billion. Smutters told Fortune that if the conflict rages for a total of two months, or seven more weeks, that it will inflict net new expense on U.S. taxpayers of $65 billion.

An even moderately-long war makes a big situation significantly worse

In its February 11 report, the CBO projected a gap between expenditures and revenue for FY 2026 of $1.853 billion. The U.S. gets there by spending 33% more than the Treasury collects in taxes. An Iran war that lasts 60 days would hiked the deficit by that $65 billion plus $1.4 billion in interest, or around $66.4 billion. That’s an increase of 3.6% that would raise the shortfall’s share of GDP from the forecast 5.8% to 6.0%. The $66.4 billion would get tacked onto the deficit, and raises the amount we need to borrow, plus interest, year after year.

But it’s best not to look at the war impact in isolation. Just days before the first attack, the SCOTUS also dealt a blow to the budget by nixing the Trump tariffs. The Committee for a Responsible Federal Budget estimates that if Trump replaces the former border duties with a 10% blanket rate, the U.S would collect $74 billion less this year than under the previous regime. Add that $74 billion to the $65 billion in spending, and the budget hammering almost doubles to $139 billion, raising the CBO-projected deficit by 7.5%.

A leathery former Senate leader used to quip that spending billions here and billions there eventually added up to real money. The lengthy war in Iran may be a Nobel quest, but it will also mean “real money.”

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Aside from loads of extra free time and the freedom to pursue new hobbies, one of the most exciting moments of retirement can be when it’s finally time to sell the family home and downsize. Not only does it mean less maintenance on a home, but it can also be a great financial boon—especially thanks to multi-decade home appreciation. 

Typically, Americans start retirement and the downsizing process in their mid 50s to mid 60s, with some waiting until their 70s or 80s. But there’s a major consideration to be made when deciding the right time to sell the family home and downsize—and it could be a make-it or break-it monthly health care expense. 

It comes down to a Medicare premium surcharge called an income-related monthly adjustment amount (IRMAA). When you turn 65, you qualify for the government health insurance for seniors, Medicare. It charges monthly premiums, but if you earn a lot of money in a given year—say, through a major home sale—those premiums spike dramatically due to the IRMAA surcharge. 

For Mike McCracken, president and founder of Wealth Guide Financial, the “number one mistake” he sees is when a home is sold too close to or after turning age 63 without running the numbers first. 

“You see, Medicare looks back two years at your tax return to calculate IRMAA,” McCracken told Fortune. “If you sell in 2025 at age 64, and that capital gain shows up on your 2025 return, it can trigger higher premiums starting in 2027 when you are already on Medicare.”

McCracken gave the example of a couple selling their home with $300,000 of taxable gain. That would push them into the second or third tier of IRMAA—a difference that could end up costing hundreds of more dollars per month, or thousands of dollars per year. By 2027, McCracken explained, their Medicare premiums would’ve jumped from about $406 per month to more than $800 per month. 

“Now project that over the next five to 10 years, and they will spend $8,000 to $14,000-plus on extra premiums,” he added. 

This is an issue little-known among seniors who are looking to sell their house: “This topic is often brought up where retirees are in shock after receiving their Medicare bill,” McCracken said.

And it’s becoming an increasingly hot issue, with more “clients getting blindsided,” Elizabeth Gavino, principal of financial and retirement planning firm Lewin & Gavino, told Fortune.

“And it’s getting worse,” she said. 

That’s largely due to how much homes have appreciated over the past few decades. A couple who bought in coastal California in the early ‘90s can easily have $800,000 to $1.5 million in total home appreciation, she explained, leaving them with up to $1 million in taxable gains in their modified adjusted gross income (MAGI).

“They had no idea it would touch their Medicare premiums,” she said. “The thing that makes this so painful is the two-year look-back. They sell the house, they move on, and then two years later Medicare sends a bill they weren’t expecting.”

And McCracken only expects this issue to continue. 

“To make matters worse, the median home prices have more than tripled in many areas,” he said. “Even moderate gains after the exclusion are enough to trigger IRMAA. I expect this to worsen.”

This problem can be especially bad in hot markets like Florida, where prices surged during the pandemic, according to Jenna Stauffer, global real estate advisor and broker associate at Sotheby’s International Realty.

“That’s why planning ahead is becoming even more important,” Stauffer told Fortune.

How to avoid IRMAA

Still, there are a few options to make sure this doesn’t happen to you when you plan to retire and downsize. First, if possible, try selling before age 63 to avoid the rule altogether. 

Another option would be to just age in place if you’re over the age of 63 already, as the sale could potentially trigger a massive financial gain, leading to sky-high Medicaid premiums. 

“I’ve definitely seen clients pause after speaking with a financial planner and starting to look at the broader financial picture of selling their home,” Stauffer said. “For so many retirees, their home is their largest asset, so selling can have ripple effects beyond just the real estate transaction.”

Other options include using a capital gains exclusion: the IRS allows people to exclude up to $250,000 in profit (for a single person) or $500,000 (for a married couple) from the sale of a primary home. Still, though, depending on how expensive the home is and how much it’s appreciated could still be enough to trigger a higher Medicare premium. 

But “the $500,000 exclusion hasn’t moved since 1997,” Gavino warned. “Home values in major markets are up 300% to 500% since then.

“This trap is only going to catch more people,” she said.

The final option is essentially to just suck it up. If you can’t avoid selling your home, just treat it as a one-time cost. Your premiums will normalize once that high-income year falls off the two-year lookback window. But that takes time.

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