Recent survey data from the Nationwide Retirement Institute®’s 2020 Health Care Consumer Survey reveal some surprising insights on the state of health care retirement planning.1 Of course, concerns around health care costs remain high, with this fear and anxiety further heightened by the COVID-19 pandemic. Although worries about current and future health care expenses are universal across generations, our survey unpredictably shows that it’s younger generations – specifically Millennials and Gen Xers – who are feeling the impacts the most. These groups are also seeking to take action, looking to financial professionals to help start this all-too-important conversation.
Rising health care costs remain a top concern among all groups
It’s worth noting that as more and more Boomers+ enter retirement, they, too, have concerns surrounding their health care. For example, 71% of Boomers+ report that one of their top fears in retirement is their health care costs getting out of control. Yet, when compared to Millennials and Gen Xers, Boomers+ tend to have less uncertainty. For instance, while 58% of Boomers+ are fearful of what health care costs may do to their retirement plans, this fear is significantly higher for Millennials (70%) and Gen Xers (77%).
As a Gen Xer taking care of my older children and my aging parent and in-laws with health conditions, caregiving is a very personal topic for me. For instance, I have seen firsthand how health care costs can get out of control. Like many Millennials and Gen Xers, I’m realizing my retirement isn’t really that far off, as well as the importance of prioritizing preventive care and planning for health care costs in retirement.
Younger generations are eager to learn more from financial professionals
Data also shows that younger generations, due to health care costs, are more likely to experience financial and social pressures and are more likely to worry about their financial stability, as well as their physical and mental health, as a result of the COVID-19 pandemic. We also learn that while younger generations lack knowledge about planning for future health care costs, they do want to learn more, particularly as it relates to what Medicare does (and doesn’t) cover.
In a special series, entitled “Health Care Planning Across Generations,” we’ll dive deeper into distinct insights for both Millennials and Gen Xers, as well how financial professionals can provide support and broach this important conversation during these uncertain times. We’ll first explore three distinct insights for Millennials from our latest health care survey.
What to know about Millennials:
- They prioritize health and wellness in theory, but not always through action. While most Millennials say health and wellness are a top priority for them, some may not be making the connection between preventative services received today and the impact on their future health and health care costs. For example, Millennials are less likely than Gen Xers and Boomers+ to have received preventative health services in the past year. While half of Millennials received a physical or wellness check, less than a third had preventative screenings or a flu shot – with about 1 in 5 or less citing that costs are either too high or that these services aren’t necessary.
- They’re under significant stress due to competing health and wealth priorities. Roughly half of Millennials (52%) have done something to save on medical related expenses, with a third either delaying or skipping care entirely. Competing health and wealth priorities, particularly abundant for Millennials, result in more negative lifestyle impacts as a result of financial stress. For example, just over half of Millennials (53%) say that some aspect of their life has been negatively affected by financial stress – e.g. relationships (38%), or performance of/attendance at work (20%).
- Health care and Medicare are “out of sight, out of mind” for many, but they want to learn more. Although nearly a quarter of Millennials (23%) say they aren’t planning for retirement costs yet, they are equally concerned – as their older counterparts – about what health care costs may do to their retirement plans. While only a third of Millennials feel knowledgeable about how much they’ll need to cover health care costs in retirement, 80% wish they understood Medicare coverage better. As a result, nearly 40% plan to discuss long-term health care costs with a financial professional in the future.
Health care costs have long been a stressful topic and even more so during the COVID-19 pandemic. The good news? Our survey found 86% of Millennials recognize that prioritizing self-care and mental health will help them save on health care expenses in the future.
Help make conversations easier with clients
As evident by the 2020 Health Care Consumer Survey, a staggering number of future retirees, especially Millennials, are concerned about current and future health care retirement costs. Due to the COVID-19 pandemic, more people are looking to engage financial professionals, many for the first time, about this pressing topic. Planning for health care costs by utilizing online tools like Nationwide’s Health Care Cost Assessment is one way you can help your clients make informed decisions by ensuring they are prepared with a holistic plan.
This information is general in nature and is not intended to be tax, legal, accounting or other professional advice. The information provided is based on current laws, which are subject to change at any time, and has not been endorsed by any government agency.
Neither Nationwide nor its representatives give legal or tax advice. Please have your clients consult with their attorney or tax advisor for answers to their specific tax questions.