Click to login and read the full article.
Don’t have access? Click here to request a demo
Alternatively, Call a member of the team to discuss membership options
US and Overseas: +1 646-931-9045
UK: 0207 139 1600
Abstract
Healthcare expenses are receiving increasing attention from retirees (and the media) today and many financial planners are starting to think about how to potentially incorporate these expenses into a financial plan. This article explores some of the key considerations associated with modeling healthcare-related expenses for retirees with a focus on the impact of these expenses on future retiree spending (and consumption) using data from the Health and Retirement Study. We find that households that experience unexpected out-of-pocket healthcare expenses tend to decrease spending by more than those who do not. For example, if healthcare expenses in a given year exceed 10% of total spending (excluding health insurance premiums, which we define as a health shock), then future total spending, nondurable spending, and consumption drop by approximately 5% more than households that do not experience the shock. Financial advisors (and households) interested in including healthcare expenses as part of a financial plan should be aware of this effect since it can potentially reduce the actual financial implications associated with a retiree health shock (or other retiree healthcare expenditures).
TOPICS: Retirement, simulations
- © 2018 Pageant Media Ltd
Don’t have access? Click here to request a demo
Alternatively, Call a member of the team to discuss membership options
US and Overseas: +1 646-931-9045
UK: 0207 139 1600