As medical costs rise in the U.S., workers are nervous over how future healthcare expenses will impact retirement.
Close to three-quarters (73%) of respondents in a new Nationwide Retirement Institute survey list healthcare costs as one of their top concerns for retirement, and 71% say they’re “terrified” over how the expenses could impact their savings. Others say the burden of medical/health expenses has “drastically reduced” how much they would need to save for retirement.
Even though Nationwide’s respondents list the expenses as among their top retirement fears, many have avoided building a plan to prepare themselves. Thirty-eight percent say they have a plan to save for how much they expect to need in retirement, while 66% cannot estimate the total cost of healthcare in the future. Further, 59% are insecure in their ability to budget for healthcare in their golden years.
Respondents were largely uninformed on federal programs like Medicare, which today cover over 69 million Americans in retirement. According to Nationwide, on average, respondents answered seven out of a 16-question Medicare quiz correctly, with 66% incorrectly thinking or being unsure if Medicare covers long-term care costs.
“Today’s health care costs are forcing Americans to make difficult decisions about when and how to seek care,” said Kristi Rodriguez, senior vice president of Financial Services Marketing and leader of the Nationwide Retirement Institute. “Those tradeoffs may feel short-term, but they can have lasting consequences — leading to poorer health outcomes that, over time, drive higher medical expenses and greater financial stress in retirement.”
Nationwide’s findings point to a potential solution in working with a retirement plan advisor. Those who receive guidance from a professional say they feel informed and confident about future healthcare planning.
Still, more work is needed to ensure participants are well-informed for expected—and unexpected—future costs. Nationwide reports that respondents are looking for deeper conversations with their advisors, and especially on topics including how to file Medicare benefits in the future. Fifty-six percent of respondents who work with a financial professional say they haven’t received advice on how and when to file for Medicare, and 72% of all respondents, despite whether they do or do not receive guidance, plan to ask about or work with a professional who can offer Medicare advice.
“Financial professionals have a powerful opportunity to help clients understand the connection between health and wealth—by budgeting for routine care and out-of-pocket expenses, planning realistically for health care costs in retirement, and navigating Medicare with confidence,” said Rodriguez. “Proactive guidance can protect savings and give clients greater peace of mind about retirement.”