A 65-year-old male in excellent health can expect to live to age 87, six years longer than his less-healthy counterpart.
Under the heading of “You can’t win” comes a new Insured Retirement Institute report that finds the healthiest individuals who have the highest probability of living beyond the average life expectancy age “have the highest risk of exhausting their assets and consuming their Social Security income on health care costs.”
A 65-year-old male in excellent health, the report finds, can expect to live to age 87, compared with a male in poorer health who can expect to live to 81. A healthy 65-year-old woman can expect to live on average to age 89, five years longer than her less-healthy counterpart. While they have lower projected annual income requirements than more unhealthy individuals due to lower expected annual health care costs, they can expect to incur higher total health care costs due to their increased longevity.
Average cumulative health care expenses, including insurance premiums, for a 65-ear-old male in excellent health can be expected to reach $345,000. The corresponding estimate for his less-healthy counterpart is about $246,000. And with Medicare only picking up approximately 60 percent of health care expenses, the rest must be covered by supplemental insurance or out of-pocket spending, the report notes.
“There’s no question that a long, healthy retirement is an overwhelmingly positive thing,” IRI President and CEO Cathy Weatherford said in a statement. ”But even those in excellent health will need to finance health expenditures.”
Even among America’s high net worth households, health care costs are cause for concern, according to a Spectrem’s Millionaire Corner survey conducted in 2013. Most feel they have enough saved to live comfortably in retirement, but close to two-thirds feel that health care costs could derail their retirement security.
Health status is a factor in retirement income replacement, the IRI study reports. An individual in excellent health with pre-retirement after-tax income of $100,000 and who plans little or no discretionary spending such as travel, may need after-tax replacement income of $65,000 annually. In comparison, his counterpart may need $80,000 in retirement income due to the expected increase in health care expenditures.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.