Growing Older Will Cost You More, Even if You Are Healthy at Age 65
July 26, 2010 - Reports & Studies
“Those currently in good health would be unwise to infer that they will continue to enjoy lower than average health-care costs,” according to a May 13, 2010 Marketwatch.com story about a research study on financial prospects of people as they age. “The reality is that even the currently healthy can expect to eventually suffer from one or more chronic diseases, which often results in high out-of-pocket and long-term-care costs,” the story said.
The story was based on a computer simulation of aging and health-related expenses, which showed that “people in healthy households face an even higher lifetime risk of requiring nursing home care than those who are not healthy, reflecting their greater risk of surviving to advanced old age, when the risk of requiring such care is highest.” The May 2010 report, “Does Staying Healthy Reduce Your Lifetime Health Care Costs?,” by the Boston College Center for Retirement Research found that a couple turning 65 last year, with one or both spouses having chronic diseases, can expect to spend $220,000 over their lifetimes in out-of-pocket spending for Medicare bills and nursing home care. However, a couple in good health at 65, can expect to live long enough to spend $260,000.
That threat of a growing financial burden in advanced old age has become even more menacing since the Great Recession has cut deeply into retirement assets. “As the life expectancy of Americans continues to increase, the risk that retirees will outlive their assets is a growing challenge,” the General Accounting Office reported in an April 2010 study, “Retirement Income: Challenges for Ensuring Income throughout Retirement." “Today, couples both aged 62 have a 47 percent chance that at least one of them will live to their 90th birthday. In addition to the risk of outliving ones’ assets, the sharp declines in financial markets and home equity during the last few years and the continued increase in health care costs have intensified workers’ concerns about having enough savings and how to best manage those savings in retirement, “the GAO said."
Even before the recession, assets were modest, “half of the households with someone aged 55 to 64 had financial assets of $72,400 or less, not much more than the median working income of $54,600 in the same year,” the GAO noted.