Health and Wealth

This month’s blog was written by our Director of Strategic Growth, Kent Oliver.  A Mississippi native, Kent graduated from the University of Georgia with a Bachelor of Business Administration in Marketing. He joined the Raanes team in February of 2018 after nearly 15 years of sales and marketing experience within two large corporations.

Recently one of my daughters was going through rhyming words in her Kindergarten class and she mentioned to me that health and wealth are nearly the same.  While she wasn’t aware in saying it, these two concepts share far more similarities than a few letters and sounds.  According to a June study from the Nationwide Retirement Institute, approximately 73% of older adults mention out-of-control healthcare costs as a top fear in retirement.  That same study indicates 64% are “terrified” of the impact health costs may have on retirement.  Yet only 48% of older adults with financial advisors have discussed health care costs as part of their plan. 

 Healthview Services’ 2017 report on healthcare costs projects healthcare spending for retirees is expected to increase an average of 5.47% for the foreseeable future, far outpacing the expected rate of inflation.  What does this mean for you as you contemplate retirement?  That same report indicates that a healthy couple retiring now at age 65 can expect to pay as much as $400,000 in healthcare expenses in retirement, taking into account premiums, deductibles, co-pays, vision, hearing, and dental costs. 

We all know that staying healthy is important, but often times it’s an overlooked aspect of our financial plan.  For the past several years a joint venture known as HealthyCapital has been incorporating statistics from Mercy Health System to produce a variety of studies aimed at exposing the impact health-related behaviors can have on retirement.  They call it the “Health Management Retirement Funding Index.”  Specifically, it looks at chronic conditions that are modifiable… conditions such as high blood pressure, high cholesterol, type 2 diabetes, obesity and smoking. 

Using an abundance of data their calculations show us what can be saved by following a physician’s orders.  For example, they note that a 45-year-old woman with type 2 diabetes could save an average of over $3300 per year in pre-retirement out-of-pocket healthcare costs just by following even basic recommendations from her physician, including things such as taking prescribed medications or limiting salt intake.  Reinvested in a 401(k) plan with modest growth rates of 6% she could increase her retirement savings by more than $100,000 and increase life expectancy by as many as 8 years!*

In addition, ample resources are available through financial advisors to limit risks associated with healthcare costs both prior to and in retirement.  From long-term care considerations to consultative solutions around Medicare planning, these resources can go a long way to preparing you for your healthcare needs in the future.

Needless to say, health and wealth have more in common than you may initially think.  Consider making health part of your next financial planning discussion.  Doctor’s orders. 

*This is a hypothetical illustration and is not intended to reflect the actual performance of any particular security.Future performance cannot be guaranteed and investment yields will fluctuate with market conditions.