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Health care costs deplete the life savings of the retired. Best advice: Stay healthy
People have one more reason to stay healthy as they grow older: holding onto their retirement savings. A new study, led by a researcher at Ohio State University, is the first to contrast how health affects the wealth of elderly married couples versus single or widowed seniors. Healthy people are 6 to 7 percent more likely not to lose a significant portion of their savings, the study showed.
Married folks are more likely to deplete their savings while paying for the onset of new chronic conditions, such as high blood pressure, diabetes, cancer, stroke, or arthritis. Most singles deplete their funds while paying for treatment of pre-existing chronic conditions.
Another finding: private, supplementary insurance can help take the sting out of health care costs for married couples. Couples with supplemental health insurance are 15 percent less likely to deplete more than a half of their wealth.
“It’s very important to be aware of the potential costs of health care problems,” said Jinkook Lee, professor of consumer and textile sciences at Ohio State. “Poor health is a physical and financial burden, and we should prepare for it.”
Lee and coauthor Hyungsoo Kim of the University of Kentucky, Lexington, examined data collected by the National Institute on Aging for its Asset and Health Dynamics of the Oldest Old (AHEAD) survey. The results appear in a recent issue of the Journals of Gerontology Series B: Psychological Sciences and Social Sciences.
Of the nearly 5,400 AHEAD participants used in Lee and Kim’s study, approximately 3,000 were married and 2,400 were single. All were age 70 or older. Participants were questioned once about their wealth between 1993 and 1994, and then again between 1995 and 1996, so the researchers could gauge any difference in wealth over a two-year period.
These married couples lost some significant portion of their life savings during the study:
For single or widowed seniors, the numbers played out a little differently. These singles lost some significant portion of their life savings:
The results reflect how our health care needs change over a lifetime, Lee explained. On average, married couples in the study were younger than widowed or single seniors. The couples were just developing chronic conditions, and could absorb some of the costs because they had insurance.
Before couples enjoy the fruits of their retirement, they should consider buying additional health insurance, the study suggests.
“When we decide between buying insurance or upgrading our lifestyle, we don’t always think about the consequences,” Lee said.
In contrast to married couples, singles or widowed spouses who participated in the study were older, and had been living with their chronic conditions for many years. Because insurance does not usually cover pre-existing conditions, they did not benefit from owning supplemental insurance as much as married people did.
“Single and widowed seniors especially face a problem. Often a widowed spouse will have already depleted much of the couple’s accumulated wealth to save the dying spouse. And after that, many chronic conditions they suffer aren’t covered by insurance,” Lee said.
Conditions such as high blood pressure or arthritis aren’t immediately life threatening, Lee and Kim pointed out, but they both carry high medication costs over the long term. Other common health costs for seniors include in-home nursing care and mobility assistance.
“Older consumers have to make difficult choices, like should they buy medicine or groceries? I’ve heard many sad stories,” Lee said.
To Lee, the findings call for more support for public health care.
“Legislators need to see that even decently affluent people can fall under the poverty level,” she said. “Almost one third of elders in the study lost more than 70 percent of their accumulated wealth in just two years.”
Lee and Kim are now conducting a follow-up study to gauge long-term effects of health care costs and see how different diseases affect wealth.