More than seven in 10 Americans nearing retirement say they are ‘terrified’ of what health care costs may do to their retirement plans. Nearly three in four older adults say one of their top fears in retirement is out-of-control costs for health care.
According to the sixth annual Nationwide Retirement Institute survey conducted by Harris Poll, reveals Americans know changes are coming and they don’t have a clear sense yet of what health care costs will look like in the future, and that is adding to the uneasiness people were already feeling about this important issue.
People are becoming increasingly reliant on federal programs to pay for their health care. The online survey of 1,316 adults over 50 finds that 64% plan to use Social Security and 61% use or plan to use Medicare as their main sources to pay for their health care costs in retirement. Shockingly, less than half use or plan to use savings to cover health care expenses.
Most older Americans acknowledge they are unprepared for certain health care expenses, yet they’re not acting to save now. One in three of those nearing retirement say they are not doing anything today to save for health care costs in retirement. Among actions that non-retirees are doing now to save for health care costs in retirement: 41% are building their savings, 33% are paying off credit cards and debt, 28% are investing and 27% are increasing 401(k) contributions.
Largely, Americans nearing retirement are worried about the unexpected. The top concern when planning for retirement – shared by three-fourths of non-retirees – is not having the funds to cover unplanned medical expenses:
• One in three say they would be unable to pay for unplanned expenses as low as $500 today
• More than half say they would be unable to cover more than $1,000 in unexpected expenses today
• Twelve percent of older adults say they would not be able to cover any unplanned expenses today
For many Americans, fears migrate beyond the unexpected to impact every day health. More than one-in-three older adults with a household income under $150,000 say they’re attempting to deflect health care costs in retirement by taking negative steps including spending less on groceries, delaying seeking treatment for illnesses and skipping preventative screenings.
As aging Americans need to rely on others for care, family members are often the first line of defense. Half of these adults are worried they will become a burden to their family as they get older, but 62 percent say they would rather die than live in a nursing home.
However, despite the overwhelming concerns about care, nearly half of older adults have not discussed health care costs in retirement with anyone. Half of married adults haven’t talked with their spouse about it, and eight in 10 adults with children haven’t talked to their children about their plan to address health care needs in retirement, most often because they don’t want to worry them.
Fifty-seven percent of those who have a financial advisor haven’t talked with their financial advisor about health care costs; most commonly because they consider it a personal issue.
Of those who have discussed retirement with a financial advisor, 75% say it is very important or important their advisor talks to them about health care costs, compared to closer to half (53%) last year.
Even more see their advisor as a good source of information on the topic – with eight in 10 who have discussed retirement with a financial advisor saying their advisor is well-equipped to discuss health care costs in retirement. While only 28% of older adults work with a financial advisor, the survey finds that, of those who do, 65% plan to discuss health care costs with an advisor.