There’s a close connection between health insurance costs and retirement savings among working Americans that advisors may not be aware of.
When health care costs rise, many employees reduce contributions to their retirement savings as well as to other savings accounts, while others withdraw large amounts from their savings or delay retirement, according to a new survey conducted by the Employee Benefit Research Institute and Greenwald & Associates.
The online survey of 1,025 workers, ages 21 to 64, found that nearly half reported rising health care costs in the past year as a result of increased premiums or cost-sharing, the latter also known as out-of-pocket expenses.
One-quarter of those employees facing bigger health costs reported that they reduced contributions to their retirement savings accounts while 41% cut back on other savings. In addition, 30% of those workers delayed retirement, 17% borrowed or withdrew funds from their retirement accounts and about one-third withdrew most or all of their funds from another savings account or increased their credit card debt.
“Rising health care costs have implications for financial well-being,” the report notes.