The Real Retirement Risk: Health Costs
For decades, retirement planning has focused on financial and macroeconomic risks, including market volatility, inflation, taxes, and recessions. While these risks are important, Americans are increasingly concerned about threats to their retirement security posed by health-related risks. This paper examines how escalating healthcare costs, long-term care needs, and caregiving expenses consistently rank among the most significant financial concerns for both pre-retirees and retirees.
Population-level health data show that most older adults live for extended periods with one or more chronic conditions, while the prevalence of cancer, cardiovascular disease, and cognitive decline increases sharply with age. At the same time, healthcare and long-term care costs have risen faster than overall inflation, exposing retirees to sustained and unpredictable financial pressures that can persist for years or decades.
Protected income solutions — particularly those designed to deliver reliable lifetime income — can play a critical role in addressing these health-related financial risks. Predictable income streams help ensure that essential expenses, including healthcare and long-term care costs, can be met regardless of market conditions or declining health. Stable income can also reduce stress and cognitive burden during periods when households are least equipped to make complex financial decisions.
For financial professionals, insurers, and policymakers, the opportunity is clear. Reframing health‑related risks as a core component of retirement planning and aligning income solutions accordingly will be essential to helping individuals navigate longer lives with greater financial resilience and confidence.