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Health Trumps Financial Security for Retirees

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Over 80% of retirees feel health is the most important part of a happy retirement, according to a survey by Merrill Lynch. By comparison, 58% of respondents said financial security was most important.

The study, “Health and Retirement: Planning for the Great Unknown,” was conducted with Age Wave in May 2014 with responses from over 3,300 adults 25 and older, and an additional sample of over 2,120 respondents 50 or older with at least $250,000 in investable assets.

There are three major forces affecting health in retirement. First, boomers are more empowered health care consumers. Second, as life spans get longer, the risk of chronic disease increases for retirees. Finally, longevity is putting pressure on health and wealth in new ways.

Health care costs can be expensive and unpredictable, but health can present a “double threat” if an illness or disability forces an early retirement, according to David Tyrie, head of retirement and personal wealth solutions for Bank of America Merrill Lynch.

Over half of retired boomers stopped working earlier than they thought they would, and of those, 37% said it was due to a health problem.

“Regardless of wealth level, health care expenses are ranking the most pressing financial concern in retirement at 41%,” Tyrie said on a conference call discussing the results of the survey. “That exceeded even the fear of outliving one’s money, which is 29%.”

The survey asked respondents what health condition was most concerning and the overwhelming response was Alzheimer’s and dementia. Respondents said dementia was scarier than cancer, stroke, heart disease, diabetes and arthritis combined.

It’s not just boomers and elderly respondents who feel that way. Fifty-three percent of millennials and 52% of Gen X respondents said Alzheimer’s and dementia were scarier than cancer (30%).

Cancer gets nearly $6 billion in funding each year from the National Institutes of Health, but funding for Alzheimer’s—“now the scariest disease in America”—gets only $550 million, Ken Dychtwald, president and CEO of Age Wave, said. Dementia research receives about $666 million in funding from NIH. —Danielle Andrus