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Healhcare Costs Threaten Retirement Plans of Affluent Americans, Women's Concerns Heightened
As the nationwide debate about U.S. healthcare costs intensifies and baby boomers move into retirement, affluent Americans are more concerned than ever that these high costs will consume their financial assets and impact retirement plans, according to survey findings released today by PNC Wealth Management, a member of The PNC Financial Services Group, Inc. (NYSE: PNC). Findings from PNC's third annual Wealth and Values Survey showed that more than four in 10 (43 percent) respondents with assets of $500,000 to $999,999 said, "healthcare costs will ultimately consume a major portion of my financial assets," a number that rose significantly from a year ago, when 36 percent expressed the same concern. At the same time, women are far more apprehensive than men about the obstacles that healthcare costs may present in retirement. More than half of the female respondents (56 percent) say they worry about maintaining their lifestyle in the face of ever-increasing healthcare expenses, compared to four in 10 (41 percent) men who feel the same way. "Because women generally outlive men and are customarily the primary caregivers in their families, it is not surprising that they are most concerned about these costs in their later years," said Jennifer Immel, vice president and senior wealth planner with PNC Wealth Management. "This is another reason why women must take charge of their financial health long before their personal health becomes an issue." Age Impacts Concerns Surprisingly, PNC's survey results revealed that as affluent individuals near retirement age, the less worried they are about being able to retire due to excessive costs of healthcare. Just 34 percent of those aged 45-64 said they were concerned, compared to 46 percent of those aged 18-44. "Our survey results suggest that those ready to retire are more confident in their ability to pay for their health care needs than those who are several years away from retirement," Immel said. "At the same time younger people are worried about future healthcare expenses, they do not save enough to prepare for the unforeseen. This is exactly the same situation with planning ahead for retirement; they don't save enough," Immel said. "The fact is, they simply must do it." Fear of the Uncertain: Medicare, Long-Term Care The uncertain future of Medicare continues to weigh heavily on the minds of affluent Americans, as 51 percent consider it to be a threat to their wealth. However that concern decreases significantly at the higher asset levels, as only 29 percent of those with more than $10 million expressed concern over the issue. They also are uneasy that nursing home or long-term care will deplete most of their assets. A majority (51 percent) of those with $500,000 to $999,999 in assets say they fear they could lose a significant portion of their savings if they require long-term care. "Given that healthcare costs continue to far outpace the rate of annual inflation, in the range of 7-8 percent per year, individuals must begin thinking long before retirement how they will deal with an unexpected health care crisis," Immel said. Those steps, she says, include saving as much as possible in tax-advantaged programs such as 401(k) plans, IRAs, Health Savings Accounts (HSAs) and regular investment accounts that defer taxes and maximize growth. Immel said the Tax Relief and Health Care Act of 2006 made HSAs more attractive for younger, affluent individuals. Survey Methodology The wealth and values survey was commissioned by PNC to identify attitudes about wealth among high-net-worth individuals, how it affects their lives and their needs in managing wealth. The survey was conducted online within the United States by Harris Interactive„¥ in October and November 2006 among a nationwide cross section of 1,123 adults (age 18 or over) with annual incomes of $150,000 or above (if employed), at least $500,000 of investable assets (if employed) or at least $1 million of investable assets (if retired). Figures for age, sex, race, education, region, income, asset level and propensity to be online were weighted where necessary to bring them into line with the actual proportions in the population. Findings are significant at the 95 percent confidence level with a margin of error of +/- 2.9 percent. The survey was designed and managed by HNW, Inc. (www.hnw.com), a leading provider of wealth marketing software and solutions to financial services companies and intermediaries seeking to capture and serve the high net worth market. Harris Interactive is the 12th largest and fastest-growing market research firm in the world. The company provides research-driven insights and strategic advice to help its clients make more confident decisions, which lead to measurable and enduring improvements in performance. Harris Interactive serves clients worldwide through its United States, Europe and Asia offices. More information about Harris Interactive may be obtained at www.harrisinteractive.com. The PNC Financial Services Group, Inc. (www.pnc.com) is one of the nation's largest diversified financial services organizations providing consumer and business banking; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; wealth management; asset management and global fund services. This report has been prepared for general informational purposes only and is not intended as specific advice or recommendations. Information has been gathered from third party sources and has not been independently verified or accepted by The PNC Financial Services Group, Inc. PNC makes no representations or warranties as to the accuracy or completeness of the information, assumptions, analyses or conclusions presented in the report. PNC cannot be held responsible for any errors or misrepresentations contained in the report or in the information gathered from third party sources. Any reliance upon the information provided in the report is solely and exclusively at your own risk. |
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