HealthyCapital, a joint venture between HealthView Services and Mercy Health System, wants employers and employees to recognize that controlling health care costs can lead to bigger retirement savings.
Its new white paper shows how much employees can save if they manage chronic health care conditions such as high blood pressure and Type 2 diabetes and deposit those savings into their 401(k) accounts.
Not only are those employees likely to live longer but they also will have more funds to finance their retirement, and their employer, which likely pays about 70% of that employee’s health coverage premium, can save as well.
This is useful information for financial advisors working with sponsors of defined contribution plans, who may have or are considering a wellness program, as well as advisors working with individual clients saving for retirement.
According to the white paper, a 45-year-old woman with Type 2 diabetes and high cholesterol can lower her annual pre-retirement out-of-pocket health costs by roughly $3,300 on average annually over the next 20 years and add eight years to her life expectancy. Assuming she deposited the additional funds into her 401(k) account earning a 6% annual return, she would have increased her retirement account balance by just over $108,000.