December 09, 2015
Annual Nationwide Survey Finds Pre-Retirees Fear Health Care Costs, But Are Not Taking Action
Survey shows pre-retirees would rather die than live in a nursing home, but don’t discuss future health care costs or plans
Columbus, OH - Sixty-nine percent of affluent pre-retirees1 say one of their top fears in retirement is their health care costs going out of control, according to an annual Nationwide Retirement Institute survey released today. However, 52 percent haven’t discussed those concerns with others, including their spouse, children or financial advisor.
According to the online survey conducted by Harris Poll on behalf of Nationwide in the fall among 1,291 U.S. adults ages 50 or older, two in three (66 percent) say they would rather die than live in a nursing home and 59 percent worry they will become a burden to their families as they get older.
Sixty-three percent of affluent pre-retirees say they are “terrified” of what health care costs may do to their retirement plans. But more than half of older adults who have a significant other (53 percent) say they are not talking with their spouse about these concerns because they don’t want them to worry. One in five feel it’s a personal issue (20 percent) or they don’t know enough about health care costs in retirement (19 percent). One in 10 say they just don’t want to think about it.
“Too many people act like if they ignore the problem it will go away,” said John Carter, president of Nationwide’s retirement plans business. “Americans are living longer and need to adequately prepare to cover health care costs and other expenses for those years. Not discussing these issues does not mean they won’t happen.”
Many older Americans feel retirement is not an option
More than one in three (37 percent) adults age 50 or older and currently not retired expect to never retire, and nearly one in four (23 percent) older adults with a household income of $150,000 or higher, say the same.
Of those who are not retired, about three quarters (74 percent) say they are concerned about having enough money to last through their retirement. The same percentage are concerned about not receiving enough through government benefits, such as Social Security and/or Medicare. Others among this group say they won’t retire because they are concerned about having enough money to cover unplanned medical expenses (72 percent) or health care costs depleting what they planned to leave for their children (55 percent).
Even more concerning is that 45 percent of older adults with children say they would give all their money to their children so they could be eligible for Medicaid-funded long-term care – a term coined ‘Medicaid planning.’
“It’s shocking to find that nearly half of older Americans think of ‘Medicaid planning’ as a way to preserve their children’s inheritance,” Carter added. “The fact that so many would give all their money to their children in order to qualify for government assistance in paying for long-term care tells me health care costs are a bigger problem than we realize.”
Help is available
While 53 percent of older adults who have talked to a financial advisor about retirement say it is important their advisor discusses health care costs in retirement with them, only 10 percent have had that discussion with their advisor. Among those who discuss retirement with a financial advisor, the top reason for not discussing health care costs is they don’t know enough about them (40 percent). Others among this group say it’s a personal issue (37 percent), they don’t want to think about health problems (19 percent) or they think health care costs in retirement will not happen to them (9 percent).
Despite few older adults having had this conversation to date, 57 percent of those who consult with a professional financial advisor plan to discuss health care costs during retirement.
To help simplify this complicated issue and encourage discussions around health care costs in retirement, Nationwide’s Personalized Health Care Assessment uses proprietary health risk analysis and updated actuarial cost data such as personal health and lifestyle information, health care costs, and medical coverage to provide a meaningful, personalized cost estimate that will help clients plan for medical expenses.
“Advisors can have more productive conversations when they use a tool to provide a fact-based cost estimate based on their clients’ health risk and lifestyle,” said Kevin McGarry, director of the Nationwide Retirement Institute. “They now can break down and simplify a complex – and often personal -- topic to take clients from terrified to confident.”
Financial advisors can visit www.nationwidefinancial.com/healthcare to learn more.
This survey was conducted online by Harris Poll on behalf of The Nationwide Retirement Institute between September 23, 2015 to October 1, 2015, among 1,291 U.S. adults ages 50 or older, of whom, 558 identify as pre-retired and having an annual household income of $150,000 or more (“affluent pre-retirees”). This survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. Complete survey methodology, including weighting variables and subgroup sample sizes, is available at firstname.lastname@example.org.
Nationwide, a Fortune 100 company based in Columbus, Ohio, is one of the largest and strongest diversified insurance and financial services organizations in the U.S. and is rated A+ by both A.M. Best and Standard & Poor’s. The company provides a full range of insurance and financial services, including auto, commercial, homeowners, farm and life insurance; public and private sector retirement plans, annuities and mutual funds; banking and mortgages; pet, motorcycle and boat insurance. For more information, visit www.nationwide.com.