Pre-Retirees Not Talking About Retirement Health Cost Fears

Pre-retirees among all financial statuses have fears about health costs in retirement, but they are not having the conversations needed to plan for them.

Even the affluent worry about health care costs in retirement; 69% of affluent pre-retirees 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.

Two in three (66%) say they would rather die than live in a nursing home, and 59% 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%) 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%) or they don’t know enough about health care costs in retirement (19%). 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,” says 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.”

NEXT: Retirement health costs a concern for all

More than one in three (37%) adults age 50 or older and currently not retired expect to never retire, and nearly one in four (23%) older adults with a household income of $150,000 or higher, say the same.

Of those who are not retired, about three quarters (74%) say they are concerned about having enough money to last through their retirement. The same percentage is 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%) or health care costs depleting what they planned to leave for their children (55%).

Even more concerning is that 45% 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.’

“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,” Carter says.

NEXT: Discussions with advisers needed

While 53% of older adults who have talked to a financial adviser about retirement say it is important their adviser discusses health care costs in retirement with them, only 10% have had that discussion. Among those who discuss retirement with a financial adviser, the top reason for not discussing health care costs is they don’t know enough about them (40%).

Others among this group say it’s a personal issue (37%), they don’t want to think about health problems (19%) or they think health care costs in retirement will not be an issue for them (9%).

Despite few older adults having had this conversation to date, 57% of those who consult with a professional financial adviser plan to discuss health care costs during retirement.

Nationwide offers a tool, Personalized Health Care Assessment, which 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. Financial advisers can visit to learn more.

The online survey was conducted by Harris Poll on behalf of Nationwide in the fall, among 1,291 U.S. adults age 50 or older.