Alarm clocks, packed lunches, daily commutes and the 9 to 5 grind—retirees may have left all that behind, but there’s one thing they share with their workforce counterparts: a deep pessimism about their ability to pay for their medical expenses during their retirement years. For both groups, confidence in their ability to afford that health care has reached a record low.
The 2009 Retirement Confidence Survey, conducted by the Employee Benefit Research Institute (EBRI), found that only 25 percent of retirees are “very confident” of their ability to pay for medical expenses, compared with 36 percent in 2008. This is the lowest level ever measured in the 19 years of the survey’s history. Retirees’ confidence in their ability to afford long-term care is also at its lowest level, down from a high of 60 percent in 2007 to 44 percent this year.
For those still working, the outlook is even bleaker. Just 13 percent of working Americans feel “very confident” that they will have enough money for health care when they retire, down from 18 percent in 2008 and, again, the lowest level ever measured by the survey. Just 10 percent felt very confident about affording long-term care.
Craig Copeland, a senior research associate with EBRI, said it’s not clear whether the confidence drop “is directly related to changes in health care costs” or a gloomy reflection of the overall downturn in the economy.
Some of the fears may be well founded: Medicare, the biggest health insurance provider for retirees, could be facing insolvency in less than a decade, according to the Medicare Board of Trustees. Congress and the Obama administration are now at work on critical reforms they hope will make health care accessible and affordable for all Americans, but no one can be certain they will succeed.
Also uncertain is how quickly health care costs will continue to grow. According to the Alliance for Health Reform, health care costs tripled between 1990 and 2007. Those costs currently consume more than 17 percent of the total economy and, if they continue unchecked, will consume 25 percent by 2025.
Elizabeth Nolan Brown is an assistant editor for AARP Bulletin Today.