While healthy retirees’ immediate health care costs may be lower than their unhealthy counterparts, their extended life times will increase total costs. These are the findings of a recent report from the Center for Retirement Research.
The Center used data from the Health and Retirement Study to create a simulated lifetime health and health care cost history for households at age 65. Socioeconomic status, gender and insurance coverage were considered in the simulation.
The report found that a couple turning 65 in 2009 can expect to spend $220,000 on health care if one or both spouses suffer a chronic illness. Furthermore, 5 percent of couples can expect to spend over $465,000. Yet, healthy couples can spend between $260,000 and $570,000.
Another explanation for the seemingly contradictory finding is that retirees who are healthy now may still develop a chronic disease later in life. According to the Center’s simulation, an 80-year-old can expect to spend one-third of his or her remaining life suffering from a chronic disease.
The Center warns that healthy people planning for retirement need to plan for higher health costs instead of assuming their current good health will last.
“The reality is that even the currently healthy can expect to eventually suf-fer from one or more chronic diseases, which often results in high out-of-pocket and long-term care costs,” according to the report’s authors.
“Individuals who wait until their health declines represent a particularly bad risk because they incur higher medical costs than the healthy, at least in the short run, and also pay fewer years’ premiums. Therefore, households that do not buy Medigap when they first join Medicare run the risk of facing substantially higher premiums, as do households of any age that postpone buying long-term care insurance.”