The news comes from the latest annual Nationwide Retirement Institute Health Care Cost in Retirement survey, shed light on the profound impact of economic challenges on Americans’ confidence in affording healthcare and ensuring their overall well-being in retirement.

The survey discloses that a significant majority of respondents, 59%, harbor doubts about their ability to cover healthcare expenses as they age. Additionally, 57% express concerns about their capacity to finance caregiving for their partner or spouse.

The study also underscores the intersection of financial planning challenges with potential advancements in healthcare propelled by artificial intelligence (AI). A noteworthy 26% of Americans anticipate that AI breakthroughs in healthcare will extend their lifespans by more than a decade. Among these, Generation Z envisions an average addition of 15 years, millennials anticipate 12 years, Gen Xers expect 8 years, and baby boomers foresee an additional 9 years.* This projection suggests that Americans may be confronted with healthcare costs for a considerably extended period, necessitating strategic planning to accommodate this potential reality.

As healthcare expenses continue to be a source of concern, the survey reveals the urgency for Americans to develop comprehensive retirement plans that account for the evolving landscape influenced by both economic factors and technological advancements in healthcare.

“Advances in AI and health care technology in general are moving faster than ever and may help treat many of today’s chronic diseases, as well as other health issues,” said Kristi Rodriguez, senior vice president of the Nationwide Retirement Institute. “While this is good news, longevity requires more planning. That is why it is so important to consult with a financial professional to create a plan that prioritizes your health care needs now and for a retirement that could be longer than anticipated.”

Americans are making tradeoffs to manage health care expenses

As Americans eye a future that could be longer than anticipated, today’s economic uncertainty is putting a strain on their finances and causing them to make tough decisions about their medical care that could have significant long-term implications. 

• Nearly 1 in 5 (18%) adults have postponed health care actions such as a medical procedure, physical exam, or renewing prescriptions in the past 12 months to save money
• To find additional savings, 10% of Americans say they are considering downgrading their health insurance plan because of high inflation, including 19% of Gen Z, 11% millennials and 14% of Gen Xers
• Three-fifths of adults 18+ (60%) are placing a bet on their health by saying they chose or would choose a health insurance policy with a lower premium but higher deductible plan which typically have a cheaper monthly payment

While Americans are trading more comprehensive health coverage for lower monthly premiums, many do not have the means to cover an emergency health care expense. The survey found more than half of Americans (51%) say they could not pay off an unexpected $5,000 health care out-of-pocket expense. 

“As inflation and rising health care costs continue to be a pervasive concern, the most important action individuals can take is to consult with a financial professional,” said Rodriguez. “They can help develop tailored financial plans to ensure people are equipped to meet their health care costs without compromising their overall financial wellbeing.”

The implications on retirement planning

In a country where 100 million people live with medical debt, it’s no surprise that two-thirds of U.S. adults (66%) are terrified of what health care costs may do to their retirement plans and worry that a single large health care issue could ruin their finances for years to come. Even more Americans (72%) say that one of their top fears in retirement is their health care costs becoming out of control. 

With all this worry, 69% of Americans with chronic conditions (60% of the U.S. adult population**) say they do not have a written financial plan that includes how to pay for the health care costs related to their condition in retirement. Nearly 7 in 10 Americans (68%) do not work with a financial professional. 

Conversations with financial professionals are key

In addition to developing plans that consider health care costs and needs, financial professionals are instrumental in guiding retirees through the complexities of our health care system and helping them select the most suitable plans based on their health needs and financial situation. Research findings show this level of guidance is sorely needed. 

Nearly three-quarters (72%) of respondents said they wish they understood Medicare coverage better and the vast majority (70%+) responded incorrectly when asked basic questions about Medicare, such as what it covers, how Medicare Part B works, and cost considerations for different Medicare plans.

Americans also dangerously underestimate the average cost of health care in retirement, putting it at $55,343 when the actual cost in 2022 was almost triple that at $172,500 for an individual or $315,000 for a typical 65-year-old retired couple.***

“Our survey shows that Americans need more knowledge, guidance, and ongoing support to make informed decisions about their financial plans,” added Rodriguez. “By incorporating health care into financial planning conversations, financial professionals can help clients better prepare for the rising costs of health care.” 

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.