Americans in Tug-of-War Between Early Retirement and Health Costs

Seventy-six percent of those who are financially independent think retiring earlier will help them live longer, yet top concerns about retiring early are outliving their money and health care costs, according to a survey by TD Ameritrade.

TD Ameritrade’s Retirement & Health Survey found that for 44% of Americans older than 45, focusing on health and wellness is a primary concern.

Seventy-six percent of those who are financially independent, i.e. with enough savings that they would not need to work, think retiring earlier will help them live longer. Seventy-two percent of those who are financially independent say health is a motivator to retiring early, but 28% say health is a barrier to retiring early.

Asked what their concerns are about retiring early, 53% of Americans say outliving their money, 46% say unexpected costs for a health emergency, 35% say the economy or their investments changing for the worse, 33% say Social Security changing, 29% say inflation, 19% say unexpected costs to care for family members, 19% say long-term costs for family members and 18% say boredom.

As to the factors that Americans think are keeping them from pursuing financial independence, 57% say health care costs, 38% say uncertain market conditions, 35% say inflation, 34% say longevity, 26% say uncertainty as to whether or not they will receive Social Security benefits, 20% say long-term care costs for a family member, 18% say unexpected death or care for a family member, and 16% say lack of financial knowledge.

Asked what kind of retirement savings they have, 50% say an employer-sponsored 401(k), 50% say a traditional individual retirement account (IRA), 34% say a Roth IRA, 24% say annuities, 15% say a health savings account (HSA), 12% say a solo 401(k) and 4% say a 457 plan.

Seventy-six percent of Americans say they plan to cover health care costs in retirement via Medicare, 51% through supplemental health care insurance, 42% say health insurance, 41% say Social Security and 9% say an HSA. Forty-four percent say Medicare will cover the bulk of their retirement medical expenses.

The Harris Poll conducted the online survey of 1,503 adults age 45 or older with more than $250,000 in investable assets between September 28 and October 6, 2018. The report can be downloaded here.