As health care costs in the United States continue to rise, and inflation remains stubborn, many Americans are losing confidence in their ability to afford their health expenses and maintain their physical and financial wellbeing in retirement, according to the annual Nationwide Retirement Institute® Health Care Cost in Retirement survey, which shows inflation is forcing Americans to delay medical care and downgrade health insurance.

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Because of inflation, more than half of respondents (59%) lack confidence in their ability to pay for medical care costs as they age, and 57% worry about their ability to pay for caregiving for their partner/spouse.

The study also found that financial planning challenges may be exacerbated by the potential for medical advancements brought on by artificial intelligence (AI) to extend lifespans. One in four Americans (26%) expect AI advancements in health care to add over a decade to their lifespan. Of those, Gen Z expect AI to add an average of 15 years to their life, millennials 12 years, Gen Xers 8 years and boomers 9 years. * This signals Americans could be paying for health care costs for significantly longer than they are doing today, and they need a plan that accounts for that.

“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.”

Inflation forces Americans to make tradeoffs for medical care

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.

  • With inflation, nearly 1 in 5 (18%) adults have postponed medical care and 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. 

To learn more about the 2023 Nationwide Retirement Institute Health Care Costs in Retirement consumer survey, visit www.nationwide.com/healthcareinsights.  In addition, financial professionals can visit www.nationwidefinancial.com/health careinsights to learn more.

Survey Methodology

The research was conducted online in the United States by The Harris Poll on behalf of Nationwide among 1,260 adults age 18+ residing in the U.S. (“national sample”), including 301 Gen Z (18-26), 310 millennials (27-42), 307 Gen X (43-58), and 342 boomers+ (59+). The survey was conducted August 28 – September 11, 2023.

Data are weighted where necessary by age by gender, race/ethnicity, region, education, marital status, household size, household income and propensity to be online to bring them in line with their actual proportions in the population (for those age 27+). Gen Z (18-26) data are weighted by age by gender, race/ethnicity, region, education, size of household and propensity to be online.

To ensure the national sample was representative, the data were initially weighted by generation (Gen Z 18-26, millennials 27-42, Gen X 43-58, and boomers+ 59+) and then combined into a total age 18+ group, and for trending purposes to previous waves of the study that did not include Gen Z (18-26), the trended group of age 27+ was combined.

Respondents for this survey were selected from among those who have agreed to participate in our surveys. The sampling precision of Harris online polls is measured by using a Bayesian credible interval. For this study, the sample data is accurate to within + 3.7 percentage points using a 95% confidence level. This credible interval will be wider among subsets of the surveyed population of interest.

  • The sample data for the trended sample is accurate to within + 4.2 percentage points using a 95% confidence level

All sample surveys and polls, whether or not they use probability sampling, are subject to other multiple sources of error which are most often not possible to quantify or estimate, including, but not limited to coverage error, error associated with nonresponse, error associated with question wording and response options, and post-survey weighting and adjustments.