Nursing Home and Health Care Costs Could Double Americans’ Retirement Shortfall
Analysis by nonpartisan EBRI assumes retirees will receive current Social Security benefits.
Recent analysis by the nonpartisan Employee Benefit Research Institute (EBRI) finds that the average retirement savings shortfall is about $48,000 per individual -- and that adding nursing home and home health care costs would in some cases almost double that amount.
EBRI's research uses a model that estimates how much money Americans will need for "basic" expenses (food, shelter, etc.) and uninsured health care costs in retirement, and what financial resources they are likely to have at retirement age. The model calculates the total national aggregate and individual retirement deficits at age 65 for three cohorts of workers: Early Boomers, current ages 56-62; Late Boomers, current ages 46-55; and Generation Xers, current ages 36-45.
First presented in testimony before the Senate HELP Committee earlier this month, EBRI's analysis finds the aggregate national retirement savings shortfall is $4.6 trillion, for an overall average of $47,732 per individual. The average shortfall varies by age, gender and marital status.
In the more detailed analysis published Oct. 19 in EBRI Notes, EBRI said that adding nursing home and home health care expense increases the average individual retirement savings shortfall for married households by $25,317. Single males experience an average increase of $32,433, while single females have an increase of $46,425.
"This helps quantify just how large of an impact nursing home and home health care expenses can have on people in retirement," said Jack VanDerhei, EBRI research director and author of the report.
EBRI's estimates are stated in 2010 dollars at age 65, and represent the additional individual average amount needed at age 65 to eliminate expected deficits in retirement. EBRI noted that this aggregate deficit assumed that Americans will receive current-law Social Security benefits.
Reflecting the importance of Social Security, the EBRI analysis finds that if Social Security retirement benefits were eliminated, the aggregate retirement income deficit would almost double, to $8.5 trillion, or an individual average of approximately $89,000.
EBRI's work focuses on health, savings, retirement and economic security issues. EBRI does not lobby and does not take policy positions.