Center for Retirement Research Finds Healthy Pay Higher Costs than Unhealthy in Retirement

Although current health care costs for healthy retirees are lower than those of the unhealthy, the healthy actually face higher total health care costs over their remaining lifetime. That’s the surprising finding of an issue brief released Tuesday from The Center for Retirement Research at Boston College.

Entitled “Does Staying Healthy Reduce Your Lifetime Health Care Costs?,” the brief notes medical and long-term care costs represent a substantial uninsured risk for most retired households. An earlier brief from the Center reported findings on average lifetime health care costs at selected ages and on the distribution of those costs. This second brief explores the relationship between health care costs and health status. That is, it considers whether current good health is a predictor of low health care costs over one’s remaining lifetime. If so, healthy households could set aside less for health care expenditures than the unhealthy, and households that stay healthy could release for general consumption money that they had previously set aside for health care costs.

“The somewhat counterintuitive finding is attributed to the bottom line that all of us, whether healthy or unhealthy, are going to experience a period of ill-health prior to death,” says Anthony Webb, one of the brief’s authors. “Healthy people will live longer, and as a result, rack up higher health care costs.”