Financial Planning, Retirement

Healthcare Costs: A Challenge For Americans Of All Ages

4/27/17 8:00 AM

iStock-520660546.jpgConsumers’ overall level of economic anxiety in the United States has declined recently, according to a new Marketplace-Edison Research poll, but there are still a handful of issues that cause Americans to lose sleep at night. The biggest concern for survey participants was healthcare costs, which 82 percent of respondents said they worry about “a lot” or “a little.” Such sentiment was found to hold true for both Republicans and Democrats, and it implies that healthcare outlays are currently a greater concern for many Americans than job security, inflation, taxes, immigration, and the budget deficit. Similarly, a recent poll found that 38 percent of U.S. adults admitted that they regularly “toss and turn over healthcare and insurance bills,” up markedly from 29 percent in the 2016 survey.

Those concerns are not too surprising considering just how much healthcare costs have risen in recent years, and the potential financial burden of these expenses for retirees is even greater. Just look at an earlier analysis by the Employee Benefits Research Institute (EBRI), which estimated that a 65-year-old man (woman) would need $72,000 ($93,000) in savings just to achieve a 50 percent (coin flip) chance of having enough money to cover all healthcare expenses in retirement. For a 90 percent confidence level, those figures jump to $127,000 for a man and $143,000 for a woman. What is worse is that the EBRI’s estimates do not even include any expenses associated with long-term care, e.g. medical and non-medical care for people with a chronic illness or disability.

Long-term care costs are a growing financial risk for the aging U.S. population. Basic expenses related to long-term care can be significant and differ substantially from state to state. Supplemental insurance coverage can be purchased to help protect against potential long-term care costs but the premiums for these policies have surged in recent years. For example, long-term care policies sold in 2015 had average annual premiums of $2,727, according to LifePlans, representing a 42 percent jump in just the past decade. All of the above-mentioned statistics only increase the importance of utilizing every tax-advantaged savings vehicle available, e.g. 401(k)s, IRAs, and HSAs, and regularly working with a professional financial advisor to make sure that you remain on track to achieve the comfortable and secure retirement you deserve.



Sources: Marketplace-Edison Research,, Employee Benefits Research Institute, LifePlans, Squared Away

Post author: Charles Couch