“From virtually nowhere five or six years ago, health care expenses in retirement today are the driving anxiety for pre-retirees, now in the same league as having adequate overall retirement savings to begin with,” say the authors of the most recent edition of the Mercer Workplace Survey. “It’s not a stretch to acknowledge that health care issues today have more urgency than before, and that this shift puts retirement savings under stress.”
The survey results show just how important health care costs during retirement have become to employees. The 2007 version of the survey found that only 17% considered health care expenses in retirement as a major savings objective, while the newer 2013 data shows that 34% now mark this as a priority. Those between age 50 and 64 are especially concerned, with 45% saying their main focus is savings for health care expenses in retirement, a 13-point increase from 2012 and nearly double the level six years ago.
Many employees are in a holding pattern with retirement savings stalled until the health care outlook crystallizes, the economy brightens, or both happen, according the survey results. Findings show that:
- Most financial worries are noted as being within a point or two of last year;
- Workers’ expected sources of retirement income and the proportion of income associated with each source have been virtually flat since 2006; and
- Most expectations about retirement are about where they were in 2012, with working part time during retirement being seen as the likeliest solution to income challenges.
The survey covered a national cross-section of active 401(k) participants. Respondents were also enrolled in their employer’s health plan. The survey was conducted online with 1,506 participants between May 28 and June 5, 2013.
A report covering the results of the survey can be found here.
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