The constant climb of health care expenses in the United States is causing increasing concern, particularly as inflation continues to impact the nation. The Nationwide Retirement Institute Health Care Cost in Retirement recently released a survey that paints a worrying picture of Americans’ financial confidence as they approach their retirement years.
Decreasing Confidence In Facing Health Care Costs
The survey shows Americans’ doubts about their ability to manage health care expenses as they grow older. 59% of respondents express uncertainty about their capacity to meet these financial burdens, and 57% are anxious about the costs associated with caregiving for their partner or spouse.
Further complicating financial planning is the anticipation of medical advancements driven by artificial intelligence (AI), which could potentially extend lifespans. 26% of respondents expect AI to grant them an additional 10 years of life, with different generational expectations. Gen Z envisions 15-year extensions, while millennials anticipate 12 years, Gen Zers expect eight years, and boomers foresee a 9-year extension. This implies that Americans may need to financially prepare for health care costs over a more extended period, emphasizing the need for a robust financial strategy.
Kristi Rodriguez, Senior Vice President of the Nationwide Retirement Institute, noted, “Advances in AI and health care technology are moving at an unprecedented pace, offering hope for treating chronic diseases and other health concerns. However, longevity demands enhanced planning. Therefore, it’s vital to consult a financial professional to devise a comprehensive plan that caters to immediate and potentially extended health care needs.”
Managing Health Care Expenses
As Americans grapple with the prospect of an extended lifespan, current economic uncertainty is straining their finances and forcing them to make difficult decisions with long-term implications for their health care. Studies show that 18% of adults admit to delaying essential health care actions such as medical procedures, physical exams, or prescription renewals in the past year to save money. In addition, 10% of Americans are contemplating downgrading their health insurance plans due to high inflation, including 19% of Gen Z, 11% of millennials, and 14% of Gen Xers. In their quest for more manageable monthly premiums, 60% of adults opt for health insurance policies with lower premiums but higher deductibles, potentially leaving them unprepared to cover unexpected out-of-pocket health care expenses.
The Role Of Financial Professionals In Health Care Planning
With inflation and soaring health care costs causing widespread anxiety, consulting a financial professional is the most vital step individuals and business owners can take. These experts can help tailor financial plans to ensure people are well-prepared for the rising health care expenses without compromising their overall financial stability.
Conversations with financial professionals are pivotal, particularly in understanding complex issues such as Medicare coverage. The survey underscores a substantial knowledge gap among respondents, with 72% expressing a desire for a deeper understanding of Medicare.
In addition, Americans significantly underestimate the average cost of health care in retirement, estimating it at $55,343, while the actual 2022 cost stood at nearly triple that figure: $172,500 for an individual and $315,000 for a typical 65-year-old retired couple. This highlights the need for Americans to seek greater knowledge, guidance, and ongoing support for informed financial planning.
Nationwide’s Health Care Cost Assessment tool is an invaluable resource that helps financial professionals and clients estimate future medical and long-term care expenses by considering individual health risks and facilitating comprehensive planning for the impending rise in health care costs.
Have You Considered Partnering With A PEO?
In the face of mounting health care costs and economic uncertainties, it’s clear that thoughtful financial planning is essential for safeguarding our well-being. Financial professionals, like those found within a professional employer organization (PEO), are pivotal in guiding us through these complex financial landscapes. They offer tailored solutions to bridge the gap between our goals and financial reality. By consulting with a PEO like GMS, business owners can pave the way for a secure, confident future, free from unmanageable health care expenses. Remember, preparation is the key to not just surviving but thriving in the ever-evolving world of health care and finances. Contact us today to learn more.