09:30 AM

Americans making tough tradeoffs to pay escalating health care costs

New Nationwide Retirement Institute® survey reveals inflation top stressor when it comes to planning for health care costs in retirement

Anyone who’s made a trip to the grocery store or the gas station this year knows that inflation is taking a bite out of Americans’ pocketbooks. Choosing cheaper produce and trading down to cheaper cuts of meat have become common tradeoffs for families on a budget.

When it comes to health care in particular, tough choices today can mean bigger problems down the road. A new Nationwide Retirement Institute® survey finds that inflation has many Americans forced to make troubling choices including stopping taking a prescribed medicine: 10% say they have, and another 13% are considering doing so this year. A similar number (10% and 15%, respectively) say they’ve cancelled or postponed a medical procedure or are thinking of doing so.

Despite squeezing every penny, a fully 49% of Americans say their health care expenses have gone up this year – with no relief expected anytime soon. A third (32%) worry their monthly health care premium will increase and 40% expect their prescription drug costs will increase. Naturally, inflation has become Americans’ top stressor on retirement planning, which involves planning for medical costs as one ages.

“As the price of health care services and food reaches record highs, Americans have been forced to make tough decisions that sacrifice their health and wellbeing,” said Kristi Rodriguez, senior vice president of the Nationwide Retirement Institute. “While these decisions are understandable, these short-term tradeoffs may have long-term repercussions. Neglecting your health now can lead to far bigger costs as you age and approach retirement. Now is a critical time to consult with a financial professional to create a plan that prioritizes health care and sets you up to have access to the health care services you will need in retirement.”

More than one in ten Americans (12%) say they canceled or changed their health insurance coverage this year and another 14% say they are considering cancelling or changing their health insurance as open enrollment approaches at year’s end.

At the same time, 10% say they’ve already diverted funds from retirement savings to pay for health care expenses, either by cutting contributions or by taking withdrawals from their retirement plans. On a positive note, even more say they’ve started or increased Health Savings Account (HSA) contributions in the past year, and another 14% are considering it. This allows people with high deductible plans to set aside pre-tax money to pay for qualifying medical expenses.

One area of potential relief for those already age 65 and over is reviewing their Medicare plans during open enrollment, which runs through December 7. According to the National Council on Aging, only about 10% of people switch Medicare plans each year during open enrollment, which could mean they’re overspending for coverage they don’t need or use.

Nationwide is urging financial professionals to stress planning for health costs when working with clients: nearly three quarters (72%) of Americans say spiraling health care costs are one of their top fears about retirement, but only 39% say they have a plan to pay for health care costs in retirement.

“The role financial professionals play in creating more secure financial futures for their clients is even more important during high inflation,” Rodriguez said. “By incorporating health care into financial planning conversations, financial professionals can help clients better prepare.”

To learn more about the 2022 Nationwide Retirement Institute Health Care Costs in Retirement consumer survey, visit www.nationwide.com/healthcareinsights.com