A new research paper from LIMRA finds health-related risks are among the most under planned and financially disruptive factors in retirement—often outweighing more common perceived threats such as market volatility, inflation, or recessions.
While financial and retirement planning discussions have long focused on those other issues, Americans, the paper argues, are far more concerned about the financial impact of health-related risks in retirement.
“Market disruptions are cyclical and eventually recover. Health events, by contrast, often last for years, worsen over time, and create ongoing financial strain precisely when individuals have fewer options to adjust.”
LIMRA’s Chris Heye
According to the research paper, “The Growing Influence of Health Risks on Retirement Security” by Chris Heye, Ph.D., Fellow at the LIMRA Retirement Income Institute, healthcare costs, long-term care needs, and caregiving responsibilities consistently rank as consumers’ top threats to long-term financial security—above market declines or recessions.
A recent survey from D.A. Davidson found that 78% of Americans are concerned over the effects of rising healthcare costs in retirement, even as only 48% have considered these costs in their planning efforts.
The new LIMRA research analyzes population-level health data alongside consumer survey results and finds that health-related financial risks are both widespread and persistent. Chronic illness, cardiovascular disease, cancer, and cognitive decline affect a majority of older adults and often result in prolonged, unpredictable costs that can erode retirement savings over time.
“Health-related risks are fundamentally different from traditional retirement risks,” said Heye. “Market disruptions are cyclical and eventually recover. Health events, by contrast, often last for years, worsen over time, and create ongoing financial strain precisely when individuals have fewer options to adjust.”
The research highlights several sobering realities facing U.S. retirees:
- More than three-quarters of U.S. adults live with at least one chronic illness, and over half have multiple chronic conditions.
- Roughly 40% of Americans will develop cancer during their lifetime, with diagnosis most common around retirement age.
- Cardiovascular disease affects more than half of adults over age 40 and remains the leading cause of death in the United States.
- As life expectancy increases, many Americans experience a growing gap between lifespan and healthspan, spending up to 10-12 years managing chronic illness or disability later in life.
- Long-term care remains dramatically under planned, despite 7 in 10 adults eventually needing some level of care.
These health trends coincide with rapidly rising healthcare costs. Even after age 65, Medicare beneficiaries remain exposed to increasing premiums, deductibles, copayments, and prescription drug expenses that can total hundreds of thousands of dollars over retirement. Long-term care costs, often exceeding $100,000 per year, remain largely uncovered by public programs.
Consumer research shows these risks are top of mind for both pre-retirees and retirees, particularly among Gen X. The paper concludes that retirement planning must better reflect health-related financial risks, with predictable income solutions playing a key role in supporting long-term financial resilience.
To read the full paper and other LIMRA Retirement Income Institute research, visit: www.limraconsumer.com/retirement-income-institute.
SEE ALSO:
• Concerns Over Healthcare Costs in Retirement Grow
• Rising Healthcare Costs Threaten Retirement Income