Americans are increasingly concerned about the future of Medicare, with nearly two-thirds (63%) fearing the program will not be there when they need it, according to the annual Nationwide Retirement Institute® Health Care Costs in Retirement survey. When asked about their biggest retirement planning stressor, one in five (20%) selected Medicare running out of money.
As Americans’ fears about the long-term solvency of Medicare grow, many want meaningful reforms. When thinking about the 2024 U.S. Presidential election, more than two in five (42%) said the top health care priority for the next administration to address should be ensuring Medicare’s stability, just behind lowering out-of-pocket health care costs (43%) and lowering prescription drug prices (43%). Notably, these reforms have some bipartisan support for the next administration to address with 47% of Democrats and 43% of Republicans prioritizing Medicare’s stability, and 47% of Democrats and 44% of Republicans wanting lower prescription drug prices to be addressed.
“Concerns about the future of Medicare are adding another layer of uncertainty for Americans as they consider how they’ll manage health care costs in retirement,” said Kristi Martin Rodriguez, senior vice president of the Nationwide Retirement Institute. “With high living costs already squeezing household budgets, many are worried about having enough saved to cover their long-term health care. Given the current pressures and potential for future health care cost increases, it is never too early to begin planning for health care expenses in retirement.”
The survey found that high costs remain a major barrier for many Americans trying to build a solid financial safety net, with rising health care expenses exacerbating their concerns and financial stress. For example:
- 67% worry a single large health care issue could ruin their finances for years to come
- 49% said medical and health expenses have drastically reduced how much they saved/will be able to save for retirement
- 44% could not pay off an unexpected $5K health care out-of-pocket expense
- 25% have canceled in the past 12 months or are considering cancelling/postponing getting an annual physical this year due to high inflation
AI in health care: Streamlining costs and increasing life spans
Artificial intelligence offers promising solutions, potentially making health care more affordable while transforming the industry. By automating routine tasks and enhancing diagnostic accuracy, AI has the potential to improve patient outcomes and streamline care delivery. Many Americans share this optimism, with 53% expecting AI to enhance the quality of health care, 45% believing it will discover cures for chronic conditions that they may develop in the future, and 33% believing that AI could extend their life expectancy. Those who expect AI will add to their lifespans expect it will add approximately 10 years on average.
Although this progress is encouraging, it also suggests retirees might bear health care costs for more years. This has led to concerns for 62% of Americans who worry about living for a long-time and running out of money in retirement.
To prepare for this possibility, some Americans (18%) say they plan to update their retirement plans to accommodate for longer lifespans, but far too many may be unprepared for managing higher health expenses that could come with longer retirements.
Seeking help from a financial professional is key
The survey found that two-thirds (66%) currently do not work with a paid financial professional even though many Americans have clear knowledge gaps when it comes to paying for health care in retirement. For example, 54% are unable to estimate how much their annual health care costs would be/are in retirement and one-third (34%) admit they do not know how Medicare works to cover medical costs in retirement.
Despite these knowledge gaps, Americans overwhelmingly want expert guidance. A majority (83%) say managing health care costs should be part of personal financial planning, with over a third (37%) strongly agreeing. Yet more than half (57%) report that their financial professional has not provided advice on how and when to file for Medicare benefits.
“Now more than ever, seeking guidance from financial professionals is essential,” added Rodriguez. “Advisors should proactively address health care costs, from Medicare to AI’s potential impact on life expectancies, to help ensure their clients’ savings last as long as they will need to. A well-informed plan is key to securing financial futures.”
To help financial professionals guide these conversations, Nationwide’s Health Care Cost Assessment tool uses proprietary health risk analysis and updated actuarial cost data to help financial professionals and clients estimate future medical and long-term care expenses.
To learn more about the 2024 Nationwide Retirement Institute Health Care Costs in Retirement consumer survey, visit www.nationwide.com/healthcarecosts. In addition, financial professionals can visit www.nationwide.com/simplifyhealthcarecosts to learn more.
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Nationwide, widely recognized as a leading personal lines property and casualty insurance company, offers so much more than just great home and auto insurance. The company has evolved into a financial services powerhouse, providing a wide range of retirement and investment solutions to help Americans protect their financial futures, along with offering financial solutions for businesses.
Nationwide continues to lead the way with its diverse range of financial solutions and thought leadership, ranking No.1 in 457(b) retirement plans, company-owned life insurance and universal life. Nationwide also ranks in the top ten for linked benefit long-term care insurance, traditional variable annuities and fixed indexed annuities, with forty-eight 4- or 5-star Morningstar rated mutual funds1. Nationwide has established itself as a leader and innovative thinker in the industry with its suite of Protected Retirement solutions designed to help defined contribution plan participants convert their savings into lifetime income. Nationwide is also the nation’s No. 1 agribusiness insurer, a leader in excess & surplus lines and standard business insurance, and a top pet insurer. Founded to protect and built on trust, Nationwide has spent nearly 100 years safeguarding what people value most: their families, businesses, and futures.
