People Are Retiring Later — Is Health Insurance Part of the Issue?
The American Dream of working a good job and retiring in your early 60s may be delayed by a few years. A new Gallup poll shows that Americans are continuing to retire later in life and planning to work longer.
With data gathered from the organization’s latest Annual Economy and Personal Finance survey, which polled 1,018 people in the U.S., it was revealed that current retirees reported clocking out at age 61 (versus age 57 in the 1990s). And those retiring in the future expect to do so at age 66 (up from the average age of 60 in the ’90s).
Gallup has recorded retirement responses every year since 2002, and the trend is continuing upwards as Americans delay stopping work.
There are a few obvious reasons for this swing. One is that Americans born after 1960 have to wait until age 67 to receive full Social Security benefits; only partial benefits are offered at age 62. A recent GOBankingRates article found that the best retirement age is your full retirement age for this reason. But there’s also incentive to wait to start collecting Social Security, as recipients receive an 8% increase in payout amounts each year up to the age of 70.
There’s also the fact that humans are living longer than they did decades ago when more people retired earlier. This is part of the reason why the government upped the age to start collecting Social Security. With the average life expectancy for a 65 year old now around 83 years for men and 85 years for women, this means retirees often collect Social Security benefits for 20 years or more.
And, of course, living expenses are at a premium, especially with inflation at a 40-year high and affecting everything from groceries to medical costs. When you’re on a fixed income like Social Security, those benefits don’t always cover what’s needed.
But there could be another explanation — the lack of affordable healthcare, especially as people age and may need more medical attention and medications. According to an article in Kiplinger, not having adequate access is one of the top reasons people delay retirement.
One of the keys to retirement is the ability to enroll in Medicare. You can’t do that until age 65, even if you start collecting partial Social Security at age 62. That three-year gap has been problematic.
Fidelity Investments estimates that, at current rates, a 65-year-old couple will spend around $315,000 on healthcare-related expenses after retiring. That’s up 5% over 2021, CNBC reported.
There are options other than delaying retirement. For example, from ages 62 to 65, you can enroll in Affordable Care Act coverage. But the benefits offered by Medicare are enough to push some people to hold on to their jobs and employer healthcare plans until reaching age 65.
The University of Michigan conducted a National Poll on Healthy Aging in late 2018 and found that one in five adults ages 50 to 64 (19% of respondents) “either kept a job, considered delaying retirement, or delayed retirement to keep their employer-sponsored health insurance.”
If the Inflation Reduction Act passes in the House, Medicare recipients can expect to benefit even more from added provisions, such as a $2,000 annual cap on prescriptions.
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