Reducing Healthcare Costs Today to Grow Your Retirement Tomorrow
A top concern for individuals nearing retirement is out-of-pocket healthcare costs. A recent survey revealed that 74 percent (of 1,316 U.S. adults aged 50 or older) admit that one of their top fears is out-of-control healthcare costs, and 64 percent are terrified of what healthcare costs may do to their retirement plans (up from 57 percent in 2015).¹
Although the fear is clearly real, there is something people can do to mitigate future healthcare costs. Personal care and healthy lifestyle choices can reduce healthcare costs and increase retirement dollars.
Many organizations are initiating wellness programs to promote healthy living among their employees. These programs focus on employee engagement and correcting the health epidemics facing Americans today. 87 percent of the world’s workers are disengaged.² Additionally, sedentary office culture is being linked to lifestyle-related conditions such as diabetes and heart disease.³
A case study conducted by HealthyCapital follows a typical 45-year-old male (John) diagnosed with high blood pressure. The study showed that John will spend $1,591 more annually out of pocket today versus a healthy person. With a few simple lifestyle adjustments (exercising, limiting alcohol intake, choosing healthy fats and limiting dietary salt) he could save an average of $3,285 annually over his lifetime, extend life expectancy by three years and reduce his pre-retirement (age 50-64) healthcare costs by $65,697. If he invested his annual savings into a typical retirement portfolio, John could generate an additional $100,348 for retirement by age 65.⁴
Annual Out-of-Pocket Healthcare Costs⁵
| AVERAGE | WELL MANAGED | REDUCTION IN HEALTH EXPENDITURES | |
|---|---|---|---|
| Age 45 | $2,477 | $1,286 | $1,192 |
| Age 64 | $13,936 | $7,343 | $6,592 |
| Total Pre-Retirement | $138,288 | $72,591 | $65,697 |
| Total In-Retirement | $51,790 | $28,031 | $23,759 |
| Grand Total | $190,078 | $100,622 | $89,456 |
Practical Steps for Managing Healthcare Costs
While the statistics seem inevitable, there are actionable steps individuals can take to help protect their health, and retirement savings!
Schedule annual check-ups to catch health issues early.
Take advantage of employer wellness programs or incentives.
Use health-tracking apps or join online wellness communities for support.
Make small, sustainable changes to your diet and activity level.
Every dollar saved on healthcare through healthy choices is a dollar that can be invested for the future. As seen in John’s example, these savings can compound significantly over time, providing greater peace of mind as individuals approach retirement.
Moving from an average lifestyle to well-managed living is a clear win — not only does the well-managed person feel better, but they also have additional income in both pre-retirement and retirement.
Taking the First Step
Consider having your employees review their current health habits and identifying one small change they can make this month to improve their long-term well-being. For more tips and resources on healthy living and retirement planning, explore reputable organizations like the CDC and AARP.
Encouraging employees to live a well-managed life through wellness programs is not only a benefit for employees, but employers as well, through reduction in medical-related employee absence and increased productivity and morale. To learn more about implementing a wellness program for your employees, connect with any of our Trusted Advisors.
Sources
¹ Nationwide. “Healthcare Costs in Retirement Survey.” https://nationwidefinancial.com/media/pdf/NFM-16070AO.pdf.
² Gallup. “The worldwide employee engagement crisis.”
³ Harvard Health. “Too much sitting linked to heart disease, diabetes, premature death.”
⁴ HeatlhyCapital. “Building Wealth Through Wellness.”
⁵ HeatlhyCapital. “Building Wealth Through Wellness.”