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The Hidden Cost of Retirement: Health Care


The good news on a Monday: Some Americans – concerned about health-care costs in retirement – are embracing healthier lifestyles.

The sobering news: Most of us still aren’t getting the message about just how steep those costs might be.

A survey published last week by Sun Life Financial Inc., the Toronto-based financial services company, found that 53% of surveyed adults in the U.S. are taking steps – such as improving one’s diet, quitting smoking and exercising more often – to help limit medical bills in later life. (And the older the individual, the more likely he or she has changed. Seventy-four percent of surveyed adults age 60 to 66 report pursuing a healthier lifestyle, compared with 45% of respondents ages 30-39.)

But the study also found that fully 40% of Americans have “no idea” how much they will spend on health care after retiring – and only 8% estimate that such costs will exceed $200,000. That figure, unfortunately, is a good benchmark. (A separate report published in March by Fidelity Investments estimates that a 65-year-old couple retiring in 2011 will need $230,000 to pay for medical expenses throughout retirement – not including nursing-home care.)

Sun Life also asked workers about their plans, if any, to cover out-of-pocket health-care costs in later life. Seventy-four percent of those surveyed said they had no specific strategy for handling medical bills in retirement.

The findings help explain the title that Sun Life attached to the report: “Flying Blind: How Working Americans View Healthcare Costs in Retirement.”

Of course, many of us have a tough time saving for retirement itself – never mind setting aside funds for health-care expenses. But as the Sun Life survey notes, there are inexpensive steps that all of us can take – starting today – to reduce such costs. The most important are lifestyle changes: diet and exercise. But also consider taking advantage of wellness programs at work. Many employers are adding or upgrading these programs – to help you and the company’s bottom line (by reducing absenteeism, for instance).

And think about subscribing to one of the growing number of newsletters from top-tier health organizations that put a spotlight on health matters for individuals age 50-plus. Among the best: “Focus on Healthy Aging,” from the Mount Sinai School of Medicine in New York; “Health After 50,” from Johns Hopkins in Baltimore; and “Healthy Years,” from the UCLA division of geriatrics in California.


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About Encore

  • Encore examines the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities and priorities of today’s retirees. The blog also explores news that affects retirement, from the Wall Street Journal Digital Network and around the web. Lead bloggers are reporter Catey Hill and senior editor Jeremy Olshan. Other contributors include The Wall Street Journal’s retirement columnists Glenn Ruffenach and Anne Tergesen; the Director for the Center for Retirement Research at Boston College, Alicia Munnell; and the Director of Research for Pinnacle Advisory Group, Michael Kitces, CFP.