Anyone who has been to the grocery store or gas station this year knows that inflation is eating away at Americans’ pockets. Choosing cheaper products and trading cheaper cuts of meat have become common trade-offs for families on a tight budget.
When it comes to health care in particular, tough choices today can mean bigger problems in the future. A new study by the Nationwide Retirement Institute® finds that inflation is causing many Americans to make anxious choices, including stopping taking a prescription drug: 10 percent say they have, and another 13 percent are considering doing so this year. A similar number (10% and 15%, respectively) say they have canceled or postponed a medical procedure or are considering doing so.
Despite squeezing every penny, a full 49% of Americans say their health care costs have increased this year — with no relief expected anytime soon. A third (32%) worry that their monthly health care premium will increase, and 40% expect their prescription drug costs to increase. Naturally, inflation has become the biggest stress for Americans when planning for retirement, which includes planning for medical expenses as they age.
“As health care and food prices hit record highs, Americans are forced to make tough decisions that sacrifice their health and well-being,” said Christy Rodriguez, senior vice president of the National Institute on Retirement. “While these decisions are understandable, these short-term trade-offs can have long-term consequences. Neglecting your health now can lead to much greater costs as you age and approach retirement. Now is a critical time to consult a financial professional create a plan that prioritizes health care and allows you to access the health services you’ll need in retirement.”
More than one in ten Americans (12%) say they have canceled or changed their health insurance coverage this year, and another 14% say they are considering canceling or changing their health insurance as open enrollment nears the end of the year.
At the same time, 10% say they have already diverted funds from retirement savings to pay for health care costs, either by reducing contributions or taking withdrawals from their retirement plans. On a positive note, even more say they have started or increased contributions to health savings accounts (HSAs) in the past year, and another 14% are considering it. This allows people with high deductible plans to set aside pre-tax money to pay for qualified medical expenses.
One area of potential relief for those already 65 is a review of their Medicare plans during open enrollment, which runs through Dec. 7. According to the National Council on Aging, only about 10 percent of people switch Medicare plans each year during open enrollment, which can mean they’re overspending on coverage they don’t need or use.
Nationwide urges financial professionals to emphasize health care planning when working with clients: Nearly three-quarters (72%) of Americans say spiraling health care costs are one of their top fears about retirement, but only 39% say they have a plan to pay for health care costs in retirement.
“The role that financial professionals play in creating more secure financial futures for their clients is even more important in times of high inflation,” Rodriguez said. “By including health care in financial planning conversations, financial professionals can help clients better prepare.”
To learn more about the National Institute of Retirement’s 2022 Consumer Health Expenditure Survey, visit www.nationwide.com/healthcareinsights.com.
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