Health Care Costs Top the List of Financial Worries in Retirement, New Research from eHealth and Retirable Shows

Rhea-AI Summary

A recent survey reveals that 63% of individuals consider healthcare costs their primary concern, surpassing worries about running out of money and inflation. Retirees are cutting back on expenses due to financial anxiety.

Insights

Health Economist

Health care costs represent a significant portion of retirees' budgets, often outpacing other expenses. The statistic that 63% of individuals rank health care costs as their top concern underscores the strain that medical expenses can place on retirement savings. This concern is further magnified by the fact that health care inflation typically exceeds general inflation, meaning that the cost of medical care is likely to increase at a faster rate than the overall cost of living.

From a macroeconomic perspective, the high level of concern about health care costs can lead to broader economic consequences. For instance, if retirees are spending less today due to these worries, there could be a decrease in consumer spending, which is a key driver of economic growth. Additionally, this reduced spending can impact sectors that traditionally benefit from retiree spending, such as leisure and hospitality.

Financial Advisor

For individuals planning for retirement, the prioritization of health care costs over fears of running out of money or inflation suggests a shift in retirement planning strategies. As a financial advisor, one would suggest that clients consider health care costs as a separate category within their retirement portfolios and possibly look into health savings accounts (HSAs) or long-term care insurance as tools to mitigate these expenses.

The psychological impact of health care costs on spending habits indicates that retirees may benefit from a more dynamic financial plan. This plan would not only address the expected costs but also the emotional comfort of the retiree, ensuring that they feel secure in their financial future despite rising health care costs.

Market Research Analyst

The data points to a potential shift in consumer behavior within the retiree demographic, which companies should take into account when forecasting sales and marketing strategies. Businesses in the health care sector might see an increase in demand for cost-effective solutions, while luxury goods and services might experience a downturn due to reduced discretionary spending by retirees.

Understanding the primary concerns of retirees can help businesses tailor their products and services to meet the needs of this demographic. Companies offering retirement planning services, for example, might focus on creating products that provide financial security against health care volatility. Additionally, this trend could influence the stock market as investors may favor industries that cater to health-conscious retirees or those offering financial products that hedge against health care costs.

63% say health care costs are a top concern, more than running out of money (58%) and inflation (53%)

Most retirees spend less today due to worry about health care costs; few saved money specifically for health care costs in retirement

Most do not think their money will last them through retirement

AUSTIN, Texas, March 28, 2024 /PRNewswire/ -- In retirement, personal finances and health care costs go hand in hand. A lack of preparation for one can expose you to serious risks in the other, as illustrated by new original research jointly published today by eHealth, Inc. (Nasdaq: EHTH) (eHealth.com), a leading online private health insurance marketplace, and Retirable, a retirement peace of mind platform offering products and services across the retirement, investing, planning, spending and protecting spectrum.

To better understand the intersection of health care and personal finances in retirement, eHealth and Retirable commissioned a general population survey of Americans age 60 through 70, some already retired and enrolled in Medicare, others anticipating retirement and Medicare eligibility. Over 520 responses were collected. Key findings from the report include:

• The cost of health care is the #1 financial concern in retirement: Overall, 63% cite health care costs as a top worry in retirement, ahead of running out of money (58%) and inflation (53%).
• Worry about costs is cramping retirees' lifestyles: 55% say concerns about health care costs cause them to spend less than they would otherwise.
• Only one third have saved money specifically for health care costs : Only 33% of those currently retired saved any money specifically for health care costs they might face after retiring.

"Selecting the right Medicare health plan for your personal needs and budget is an incredibly important financial consideration in retirement," said eHealth CEO Fran Soistman. "Affordable premiums are key, but it's also important to look beyond premiums. By choosing a Medicare insurance plan that properly aligns with your personal health care needs, you can minimize or avoid unnecessary out-of-pocket costs."

"Medicare beneficiaries understand the value of working with a licensed agent when choosing their coverage, but too few understand the value of working with a financial planner specializing in retirement," said Retirable CEO Tyler End. "The insights we're sharing today illustrate the need for smart, long-term retirement planning, whether you're approaching retirement age or already retired."

Additional highlights from the report:

• Most don't think their money will last through retirement: Among current retirees, only 42% believe they will have enough money to last through retirement; among those not yet retired, that figure is 29%.
• Non-mortgage debt is a hurdle for many: Overall, 46% of respondents have non-mortgage debt; among these, nearly 80% are in debt $5,000 or more.
• Financial scams and identity theft worry many: 73% express concern about financial fraud and identity theft; 39% have had their identity stolen or been a victim of fraud.

Read the full report.

Report findings are based on a survey of 521 American consumers ages 60 to 70, drawn from the general population. Among the respondents, 68% said they were currently retired, while 58% said they were currently enrolled in Medicare. The survey was conducted in March of 2024. Additional information is provided in the methodology section of the report.

About eHealth (NASDAQ: EHTH)
We're Matchmakers. For over 25 years, eHealth has helped millions of Americans find the healthcare coverage that fits their needs at a price they can afford. As a leading independent licensed insurance agency and advisor, eHealth offers access to over 180 health insurers, including national and regional companies.

For more information about eHealth, visit ehealth.com or follow us on LinkedIn, Facebook, Instagram, and X. Open positions can be found on our career page.

eHealth media inquiries: pr@ehealth.com

About Retirable
Retirable, the retirement peace of mind platform, offers products and services across the retirement investing, planning, spending and protecting spectrum. Retirable was founded by industry veterans to empower a worry-free retirement for everyone. By opening access to financial guidance for retirement, Retirable gives its clients greater confidence and control when they need it most. Headquartered in NYC and founded in 2019 by Tyler End, CFP® and Ian Yamey, Retirable is backed by Primary, Diagram, Vestigo Ventures, Portage and Primetime Partners.

For more information about Retirable, please visit www.retirable.com.

Retirable media inquiries: press@retirable.com

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SOURCE eHealth, Inc.

FAQ

What percentage of people view healthcare costs as a top concern according to the survey?

63% of individuals consider healthcare costs their primary concern.

What are retirees doing to manage financial anxiety according to the survey?

Retirees are spending less due to financial worries.

What worries rank lower than healthcare costs according to the survey?

Running out of money is a concern for 58% of individuals, while inflation worries 53% of the surveyed population.