Retirement and Health
Your health is one of the most important factors to consider when planning for retirement. Some studies show that retirement is associated with a decline in health, while other research suggests that your health improves after you retire.
Retirement is often seen as a reward for decades of hard work and dedication. All those long hours at the office or job site can lead to years of relaxation and freedom.
But many retirees find themselves struggling with declining health and increasing limitations in what was expected to be their golden years.
Evaluating your health before retirement and accounting for health care needs after you leave your job behind is an essential part of retirement planning.
Is Retirement Good for Your Health?
Changes to Social Security rules enacted in 1983 encourage workers to wait longer to retire by penalizing them for retiring early and rewarding those who postpone.
Changes in Social Security retirement ages were based on longer life expectations, researchers at the University of Michigan noted. While policymakers likely assumed retirees’ health would improve as well, the opposite has proved to be true.
In fact, the researchers say pre-retirees now have more health challenges than previous generations.
“We found that younger cohorts are facing more burdensome health issues, even as they have to wait until an older age to retire, so they will have to do so in poorer health,” Robert Schoeni, Ph.D., a U-M economist and demographer, told a university online publication.
Among other things, the people who are required to wait longer to retire have higher rates of cognitive problems in their 50s than their predecessors, and more rated their health fair or poor.
But retiring can also lead to decline in health, according to the Harvard School of Public Health.
A 2015 study by Harvard researchers of the ongoing U.S. Health and Retirement Study shows that 40 percent of individuals were more likely to have a heart attack or stroke in the first year of retirement compared to peers who were still working.
“Our results suggest we may need to look at retirement as a process rather than an event,” said J. Robin Moon, the lead author of the Harvard study.
Mental and Psychological Challenges in Retirement
Cognitive declines later in life make it more difficult for retirees to manage their finances, particularly lump-sum savings from 401(k)s and other retirement accounts.
Retirees are also more vulnerable to becoming victims of fraud, putting these savings at risk.
In fact, researchers found nearly one in six seniors reported losing money in a fraudulent investment scheme.
The good news here is when seniors with cognitive challenges receive help managing their finances, they are no more vulnerable to fraud than people with no impairments. And about 85 percent of dementia sufferers have some form of help with their finances.
Retirement’s Effect on Self Image
Harvard Business School Professor Teresa Amabile says retirement has a major impact on people’s sense of their own identity.
Retirees have to restructure their lives when they stop working, she says. They lose the relationships with people they worked with, the structure of their workdays and even their weekends.
People have to find ways to fill their days and detach from work, Amabile said in an interview with Harvard Business Review. Some people, she said, have trouble moving on.
Many retirees deal with these issues by bridging retirement with their previous lives. They participate in volunteer activities, write their memoir or start small businesses as consultants. They may find a way to continue their work interests in a more limited way, while enjoying time with their families and in leisure activities.
One of the most daunting challenges faced by retirees is the potential need for long-term care. It’s estimated that 70 percent of people aged 65 or older will need long-term care. But the care is expensive.
According to AARP, the health costs for nursing home care was more than $100,000 a year in 2018 for a private room. The estimated annual cost of a home health aide for 44 hours a week in 2020 is $53,000, according to Genworth, an insurance company based in Virginia.
For most, the insurance to provide long-term care is unaffordable. According to the National Association of Insurance Commissioners, just 7.2 million American had coverage in 2014. Less than 0.5 percent of businesses offer this coverage to employees, but that includes 20 percent of workplaces with at least 10 employees.
Stand-alone long-term care insurance is not the only option for retirees in this area. Some annuity policies offer the option of purchasing long-term-care riders, which could help cover the cost if care is needed. But there are caps on the amount of payments and often on the length of time.
By and large, long-term care is not covered by Medicare, which just covers up to 100 days of skilled nursing for each medical condition that qualifies.
Overwhelmingly, Medicaid covers the cost of long-term care provided in professional settings. However, eligibility differs between states, which have flexibility in setting Medicaid rules.
When it becomes difficult to care for themselves, many retirees prefer to stay in their homes and have caregivers provide the help they need. Most retirees depend on unpaid family members and friends to provide home health care.
A 2015 study by the AARP Public Policy Institute and the National Alliance for Caregiving found that about 34.2 million people provided unpaid care to someone 50 or older in the previous year. The vast majority were caring for a relative.
Retirees who need to hire home health care workers face a shortage that is expected to worsen in the coming years.
This shortage is being exacerbated by the growth of the nation’s aging population, according to the Paraprofessional Healthcare Institute (PHI), which says, “Greater demand for home care services, paired with slow growth in the labor force, has created a significant shortage in home care and the broader direct care sector. Additionally, home care jobs suffer from high turnover, and our experience in the field shows that states are increasingly struggling to find and keep workers.”
Research done by PHI has concluded that 7.8 million direct care jobs will be unfilled by 2026.
Some states, including Washington, are improving access to home health care by creating registries to match patients and their families directly with workers, rather than requiring them to go through agencies.
Hiring a Home Health Aid
Medicare has a database and other information for finding and comparing agencies that provide home health care in your area. This online site also has information about providers that have been terminated from Medicare or are in danger of being terminated.
17 Cited Research Articles
- Genworth. (2019, November 21). Cost of Care Survey 2019. Retrieved from https://www.genworth.com/aging-and-you/finances/cost-of-care.html
- Harvard Business Review. (2019, January 15). How Retirement Changes Your Identity. Retrieved from https://hbr.org/ideacast/2019/01/how-retirement-changes-your-identity
- Jones, J. B., et al. (2019, July). The Lifetime Medical Spending of Retirees. Retrieved from https://www.nber.org/papers/w24599
- Employee Benefit Research Institute. (2019, January 23). Deferred Income Annuities Enhance Retirement Readiness. Retrieved from https://www.ebri.org/docs/default-source/ebri-press-release/pr-1231-qlacs-23jan19.pdf?sfvrsn=ed223f2f_4
- Anspach, D. (2019, January 6). How to Plan for Health Care Costs in Retirement. Retrieved from https://www.thebalance.com/how-to-plan-for-health-care-costs-in-retirement-2388478
- Sackett, V. (2018, October 24). Nursing Home Costs Top $100,000 a Year. Retrieved from https://www.aarp.org/caregiving/financial-legal/info-2018/nursing-home-costs-rising.html
- Zulkarnain, A. and Rutledge, M.S. (2018, October). How Does Delayed Retirement Affect Mortality and Health? Retrieved from https://crr.bc.edu/working-papers/how-does-delayed-retirement-affect-mortality-and-health/
- Baily, J., et al. (2018, July). The Lifetime Medical Spending of Retirees. Retrieved from https://www.nber.org/papers/w24599
- Farrell, C. (2018, June 28). The Truth About Health Care Costs In Retirement. Retrieved from https://www.forbes.com/sites/nextavenue/2018/06/28/the-truth-about-health-care-costs-in-retirement/#282a035d4401
- Newport, F. (2018, May 9). Update: Americans’ Concerns About Retirement Persist. Retrieved from https://news.gallup.com/poll/233861/update-americans-concerns-retirement-persist.aspx
- Condon, C. (2017, December 19). Retiring Early Just Might Kill You, Says New Research. Retrieved from https://www.bloomberg.com/news/articles/2017-12-19/retiring-early-just-might-kill-you-says-new-research-eco-pulse
- Society of Actuaries. (2017). Shocks and the Unexpected: An Important Factor in Retirement. Retrieved from https://www.soa.org/research/topics/research-post-retirement-needs-and-risks/
- Hiltzik, M. (2016, May 11). Your vanishing health coverage: Employers are cutting retiree health benefits at a rapid rate. Retrieved from https://www.latimes.com/business/hiltzik/la-fi-hiltzik-retiree-health-insurance-20160511-snap-story.html
- Mather, M. (2016, January 13). Fact Sheet: Aging in the United States. Retrieved from https://www.prb.org/aging-unitedstates-fact-sheet/
- Social Security. (2015, May.) Thinking of retiring? Retrieved from https://www.ssa.gov/osss/prd/pdf/en/55-plus-insert.pdf
- Johnson, R.W., and Smith, K. E. (2016, February 9.). How Retirement is Changing in America. Retrieved from https://www.urban.org/features/how-retirement-changing-america
- Skerrett, P. (2015, October 29). Is retirement good for health or bad for it? Retrieved from https://www.health.harvard.edu/blog/is-retirement-good-for-health-or-bad-for-it-201212105625