Broker Check

How Your Health Affects Your Wealth

| June 22, 2020

By: Mark Woodward


While healthcare costs in retirement are not at the forefront of most younger people’s minds, they should be—the numbers can take you by surprise. Some of the core expenses you may not know are:

  • According to CPI-E (the subset of the consumer pricing index that focuses on tracking elderly spending) the cost of living for elderly people is rapidly increasing, and Social Security is not keeping up with the inflation. As a result, Social Security benefits have already lost over 30% of their buying power since 2000.[1] Social Security is no longer sufficient income in retirement, making other significant savings a necessity.
  • The average 65-year-old couple faces out of pocket healthcare costs ranging from $265,000-$349,000[2] throughout their retirement. The later couples start saving, the more expensive it may become to handle these costs.
  • Median costs of long-term care range from $24,820 per year for adult day care to $92,325 per year for a private nursing home.[3] Without proper planning these costs can become the burden of loved ones, so it is critical to both plan early for yourself, as well as encourage older family and friends to start planning.
  • Over 90% of seniors prefer to age in place so that they can better control their care and preserve income for loved ones; typical Medicare, Medicaid, and retiree plans do not cover the expenses of this.[4]
  • While many seniors do not want outside help, unpaid care costs the caregiver on average $7,000-$12,000 annually. Over 34 million Americans currently provide unpaid care for loved ones, with over three quarters of them being women.[5] Given the increased life expectancy these annual costs are likely to last even longer for future generations providing unpaid care.

In addition to the baseline costs associated with healthcare, an unhealthy lifestyle can drive these numbers even higher. To list just a few examples:

  • High cholesterol not only doubles the chances of heart disease[6], but cholesterol lowering drugs cost over $14,000 annually[7]
  • Over 84 million Americans have prediabetes (90% unaware) putting them at higher risk of developing type 2 diabetes[8], a disease that can cost up to $13,700 annually to manage[9]
  • Sleep deprivation not only increases the chances of developing type 2 diabetes[10], but costs America $411 billion every year in lost productivity and other associated costs[11]

While these numbers are scary, here is one that is more comforting: it costs as little as $547.50 a year to substitute healthier foods into your diet.[12] Coupled with regular exercise, this can not only put you at less risk of developing these preventable diseases but also increase your confidence in a comfortable retirement by up to 7x.[13]

If you were unfamiliar with these statistics, you are not alone. More than 4 out of 5 people cannot accurately estimate how much their health care will cost once they retire. However, there are four key areas of opportunity to get ahead:[14]

  1. Accepting the responsibility. The decrease in government and employer retirement funding has placed the responsibility of planning for retirement on individuals.
  2. Adjust your retirement perspectives. Completely stopping work at age 65 is not viable or desirable for most people.
  3. Protect your long-term health. Physical and financial health are both important parts of a successful retirement
  4. Find a trusted financial professional. Many people do not have the ability to make more sound decisions regarding retirement savings and investments on their own.

[1] MarketWatch, May 2020

[2] Savings Medicare Beneficiaries Need for Health Expenses: Some couples could Need as Much as $350,000 at age 65 in 2016, assuming 90% chance of having enough savings, EBRI, January 31, 2017

[3] “Long Term Care Insurance Statistics,” LTC Tree (August 16, 2016)

[4] “Aging in Place” Jane E. Brody, The New York Times (May 2, 2016)

[5] Institute of Aging, 2016.

[6] “Cholesterol Fact Sheet and heart Disease Fact Sheet,” Center for Disease Control, 2016

[7] “Cost-effectiveness of PCK9 Inhibitor Therapy in Patients with Heterozygous Familial Hypercholesterolemia or Atherosclerotic Cardiovascular Disease,” JAMA, 2016

[8] The Staggering Costs of Diabetes (infographic), American Diabetes Association, 2016

[9] Calculate What Diabetes Costs Your Business, Centers for Disease Control and Prevention, 2016

[10] “Sleep-deprived teens may have more diabetes risk factors,” Reuters, Katherine Doyle, 2017

[11] “Sleep Deprivation costs the economy billions- and sends workers to an early grace,” The Conversation, David Spencer, 2016

[12] Health Food Costs vs. Unhealthy Food costs,” Livestrong, 2017

[13] From Here Through Retirement, Transamerica

[14] The new forces shaping retirement, Transamerica

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. KANA Private Wealth Group is not affiliated with Kestra IS or Kestra AS.