A recently updated report from the National Center for Health Statistics (NCHS) estimated that the average life expectancy for Americans rose to 78.8 years in 2019 (full-year lagged data release that avoids potential COVID-19 distortions), the second annual increase in a row. Even better, it is important to remember that this headline statistic refers to life expectancy at birth, but life expectancy after you reach a certain age can be much higher. At age 65, for instance, the new NCHS calculations imply a life expectancy of 19.6 years, an improvement from 2018 and equal to 5.8 years longer than the life expectancy at birth figure. Similarly, earlier J.P. Morgan estimates suggest that if you are age 65 there is a 47 percent chance you or your spouse will live to at least 90, and 1 in 25 odds of becoming a centenarian.
The report also revealed that the rates of fatal heart disease, cancer, chronic lower respiratory disease, stroke, and Alzheimer's all fell in 2019. Although encouraging, these leading causes of death in America have yet to be completely eliminated, and any cutting-edge medical innovations that help treat these illnesses are far from cheap. Moreover, healthcare spending in old-age can be substantial, as evidenced by new data from the Centers for Medicare & Medicaid Services (CMS). Specifically, Americans spent a staggering $3.8 trillion on healthcare in 2019 (another lagged data release that avoids pandemic-related distortions), equivalent to $11,582 per person, or 17.7 percent of U.S. gross domestic product (GDP). The elderly (age 65 and older), though, do not even represent a sixth of the population but still accounted for more than a third of the total healthcare spending in America.
What is worse is that the CMS projects national health spending will grow at a rate of 5.4 percent per year through 2028. That is more than a full percentage point faster than the economy is forecast to grow during the same period, meaning that healthcare spending as a share of GDP will also continue to rise. Altogether, these statistics should provide more motivation to set aside as much money ahead of time as possible for retirement. The earlier one can start the better, and taking full advantage of 401(k)s, IRAs, HSAs, and other tax-advantaged savings vehicles can help greatly. Additional assistance is available by regularly working with a professional financial advisor to make sure that you remain on track to achieve the retirement lifestyle you deserve after decades of hard work.
Sources: CDC, NCHS, CMS