New Reports on Out-of-Pocket Expenses after Age of 70 and Retirement Confidence

Regulation | May 02, 2018 | by Steve Maag

The Employee Benefit Research Institute issued two reports recently, one titled Out-of-Pocket Health Care Expenses After the Age of 70 and the other 2018 Retirement Confidence Survey, which was done in conjunction with Greenwald and Associates.

The out-of-pocket expenses report studied the actual out of pocket health care costs for people after the age of 70 (Medicare and insurance premiums were excluded). The report had both good and bad news. The good news was that for the majority of people surveyed, out-of-pocket expenses were lower than what is commonly believed. For those that die at 95 or later, the median cumulative expenses were just over $27,000. The bad news is that for some, the expenses are catastrophic, with the 90th percentile being nearly $172,000 and 95th over $269,000.

Other findings include:

  • Nursing home expenses are major drivers of high out-of-pocket cost and 51% of women are likely to enter nursing homes versus 38% of men and likelihood increases with age.
  • Women who live longer spend more than men with similar lifespans, the 90th percentile of out-of-pocket nursing home expenses for men and women who die at 95 or later is $77,000 and $99,000 respectively.
  • One in three people over age 70 are covered by Medicaid.
  • Longevity increases the likelihood of higher out-of-pocket expenses.
  • In the report on workers’ retirement confidence, two-thirds of workers felt somewhat confident or confident of their ability to live comfortably in retirement, but the somewhat confident group was far larger than the confident group, 47% to 17%. Once retired, the very confident increases to 32%. 76% of those workers with defined contribution plans (like 401K plans) are confident of a comfortable retirement versus 46% of those without a plan. Confidence in Medicare and Social Security dropped from 52% in 2017 to 46% this year, but two-thirds of retirees report Social Security as a major source of income