Industry News

On August 2, 2022, the Center for Retirement Research (CRR) at Boston College released its issue brief, How Much Does Health Spending Eat Away at Retirement Income? The brief indicates that retirees will face significant out-of-pocket (OOP) costs for premiums, copays, and uncovered services regardless of Medicare coverage and ignoring long term care. The CRR study examined the effects of health care spending on retirees’ Social Security benefits and other income.

CRR found that the typical retiree has only 75% of Social Security and 88% of total income remaining after deducting these OOP costs. In the future, these percentages will decline further if health care costs continue to increase more rapidly than incomes.

The brief concludes, “This study shows that, at the median, OOP medical costs – including premiums, cost-sharing, and uncovered services (excluding long-term care) – leave only 75 percent of Social Security benefits available for spending on other items. Premiums for Medicare Parts B and D, Medicare Advantage, and supplemental plans (including retiree health insurance) make up the lion’s share of medical spending for most retirees, except those with the highest spending. The share of income remaining after OOP spending is lower for women and those in low-income households. With OOP health expenditures eating away at retirement income, and Part B premiums on the rise, it is understandable why many retirees likely feel that making ends meet is difficult.”

The report is available here.