longer life. More wellbeing. Biohacks that slow down aging. Researchers and healthcare providers are promising all of these advances and more.
However, what is not usually mentioned is that healthy life expectancy – the average number of years a person can expect to live in “full health” with no chronic diseases or physical limitations – goes in the opposite direction for many people.
A recent study conducted by the National Center for Biotechnology Information recorded the number of chronic multiple diseases reported by people of different generations. These chronic conditions included heart disease, high blood pressure, stroke, diabetes, arthritis, lung disease, cancer, major depressive symptoms and cognitive impairment.
Adults aged 51 and over reported more chronic diseases earlier in life than previous generations. For example, late boomers (born between 1960 and 1965) reported more chronic health problems than middle boomers (born between 1954 and 1959) of the same age. The mid-boomer group, in turn, reported more health problems than the early baby boomers (both between 1948 and 1953) who were the same age group. And the early baby boomers reported having more health problems than wartime babies (born between 1942 and 1947) of the same age.
This trend of more people the same age as the previous generation reporting chronic diseases dates back to the early 20th century. Essentially, more people have more chronic health problems than their parents, and the number of health problems is increasing even more among younger people. There is a socioeconomic component to this trend—chronic disease is more common among disadvantaged people—but there are tens of millions of middle- and upper-income adults who are less healthy than their parents.
How can that be, given the improvements in medical care? Three reasons.
First, older adults in recent generations are more likely to have conditions that increase disease risk, such as: B. obesity, lack of exercise, unhealthy diet and diabetes. Second, screening tests identify diseases that would have gone undetected in the past. Third, better medical care is enabling people with multiple conditions to live past the age at which they would have died in the past, increasing the number of chronic conditions among survivors.
Unexpected challenges to good health
Those who are in poor health face their own financial challenges. But those in good health face different challenges with retirement planning than those with multiple chronic conditions. Here are some of the unexpected risks they face that may impact their retirement.
» Longevity risk. Healthy people generally live longer than people with multiple chronic conditions, increasing the risk that their nest egg won’t sustain the desired retirement lifestyle.
» Healthcare costs. On average, annual health care costs are higher for people with multiple chronic conditions, but a Health View Services report found that the cumulative costs are higher for healthy people because they are living longer.
» Dependency and dementia. Rather than avoid these risks, healthy retirees often simply postpone these events to older ages, when the likelihood of requiring long-term care and developing dementia is much higher.
» Decline in financial capacity. Financial capacity begins to decline around age 60 and continues to decline for the rest of a person’s life. A 70-year-old generally has fewer financial opportunities than a 60-year-old; 80-year-olds have fewer skills than 70-year-olds, and the decline is even greater for people in their 90s and older. This is true even for well-educated individuals who manage household finances and are experienced investors. The result is that older people are often victims of financial abuse and fraud, and experience suboptimal financial outcomes in households that manage their own finances.
» widowhood. The likelihood of being widowed depends heavily on age. According to the American Community Survey, one in three men and three in four women aged 85 and older are widowed. The surviving spouse often has higher expenses, lower income, and a higher likelihood of needing paid home care, assisted living, or home care because they no longer have a caregiver.
» Financial challenges. Longer lifespans increase vulnerability to decades of inflation, higher taxes, lower spending on entitlement programs, and unpredictable world events that can disrupt financial markets and retirement planning.
Here’s what this means for financial advisers and their clients.
» More people will live longer than their parents. Some will spend relatively more years with multiple chronic conditions. Healthy people face different challenges because of their longevity.
» Some middle-aged people with multiple chronic conditions will not be able to work until normal retirement age, and some retirees may not be able to work after retirement to supplement income.
» Healthcare costs will be higher for many people at the extremes of good (higher cumulative costs) and poor health (higher annual costs). That alone will increase the strain on the retirement nest egg, but the problem is compounded by Medicare’s underfunding. Future retirees should plan for a combination of reduced benefits and greater cost shifting to beneficiaries, higher Medicare co-payments, co-insurance and deductibles, an increase in Medicare payroll taxes (for early retirees), and Medicare premium surcharges (income-based monthly adjusted amount) that more retirees will benefit from affect.
» Retirees with multiple chronic conditions may need long-term care sooner because of the cumulative impact of decades of health problems. Healthy retirees may also need care as they reach an age when dementia and functional impairment are common. Much of this care will be paid out of pocket because it will not qualify as “long-term care” because the level of disability will be less than required by HIPAA criteria.
Regardless of their state of health, customers must be made aware of all the risks that can jeopardize their pension. Advisors who help clients understand how their health can impact their retirement planning will make those clients successful in their post-retirement years