A Healthy Retirement: 401(k)s Aren't Enough

Financial Planing

Aetna, the Financial Planning Association and Women's Policy, Inc. Encourage Women to Plan for a Healthy and Financially Secure Retirement

Today at a Capitol Hill briefing, Aetna , the Financial Planning Association(R) (FPA(R)) and Women's Policy, Inc. delivered a call to action about the importance of considering health and benefits needs in retirement, in response to findings from a new national survey of Americans ages 45 to 75. Of pre-retirees surveyed, nearly 20 percent have spent "no time" in the past year actively planning for retirement, more than 30 percent don't know what to anticipate for health care needs, and nearly 40 percent have spent less than an hour in the past year planning for health benefits in retirement.

In light of these findings, Aetna and FPA have expanded the Plan for Your Health (http://www.planforyourhealth.com/) public education campaign by launching a "Planning for a Healthy Retirement" section with tools, tips and content that provides a framework for planning a healthy and financially secure retirement.

"Retirees who responded to the survey sent a very clear message to pre- retirees -- save more than you think you'll need for living expenses in retirement. Health care expenses are clearly a big part of that picture, since about a third of retirees are spending more than they thought they would for health care," said Aetna President Ronald A. Williams.

"Good health is one of the most important investments for a secure retirement, and those who responded to our survey agreed. Aetna and FPA are in a unique position to put our knowledge to work for consumers, providing tools and information via the Plan for Your Health Web site that can help improve understanding of benefits and focus retirement planning on two important issues -- health and finances," added Williams.

The survey findings were released today at a Capitol Hill briefing hosted in cooperation with Reps. Shelley Moore Capito (R-W.Va.) and Tammy Baldwin (D- Wis.), Co-Chairs, Women's Health Task Force; Reps. Ginny Brown-Waite (R-Fla.) and Hilda L. Solis (D-Calif.), Co-Chairs, Congressional Caucus for Women's Issues; and Reps. Ileana Ros-Lehtinen (R-Fla.) and Lois Capps (D-Calif.), Vice Chairs, Congressional Caucus for Women's Issues. Throughout the briefing, speakers underscored the need for greater health benefits literacy and tools to help consumers plan for a healthy and financially sound retirement.

The survey included more than 1,000 adults ages 45 to 75. Respondents were asked to identify whether or not they were retired, and the opinions of retirees were contrasted with those of pre-retirees. Responses from men and women also were compared.

According to the survey, when Americans plan for retirement they concentrate on finances, spending virtually no time on health benefits. This lack of attention may be because Americans are vastly underestimating health care expenses in retirement. Fifty-two percent of those surveyed expect to spend less than $300 a month on out-of-pocket costs and health care-related expenses - less than half of the $640 a month the average retiree actually spends.

In a sign of changing times, the survey also revealed that the balance of responsibility for financial planning is shifting. Among those who were already retired, 65 percent of men took the lead in retirement planning, compared to 39 percent of women. In contrast, pre-retired men and women are equally responsible for planning, with 54 percent of men and 48 percent of women leading the charge.

"While we were not surprised to hear that retirement planning falls below competing priorities such as planning for a child's education, we are concerned that 63 percent of survey respondents say that 'people they know' are confused about health benefits," said Dexanne B. Clohan, M.D., medical director, National Accounts, Aetna.

Aetna and FPA created the Plan for Your Health public education program in 2004 to help consumers make smart financial and health benefits decisions during life's pivotal moments. Now, the site has been enhanced with a section focused on retirement that features personalized tips, tools and articles developed to change the way consumers approach retirement planning:

• The Healthy Retirement Readiness Tool assesses where pre-retirees and retirees stand in the planning process, matching advice to their current level of retirement planning and offering realistic next steps. Users are directed to vignettes about people in similar life-stages, adding personal perspective to all levels of retirement planning.

• New content covering long term care, Medicare changes, retirement Q&A and tips for a healthy retirement have been added to the site.

"Men and women who are not yet retired agree that the most challenging thing about planning for retirement is their uncertainty about how much money they will need," said Jonathan Guyton, CERTIFIED FINANCIAL PLANNER(TM) professional(1), FPA member and a specialist in retirement planning. "This uncertainty may be paralyzing pre-retirees from planning because 48 percent say they have not started or have planned minimally. Whether you're 30 or 60 years old, and whether you've planned a little or a lot, the 'Healthy Retirement Readiness Tool' will help guide you through the process."

Additional Survey Findings

• A large majority of pre-retirees and retirees expect to pay for prescription drugs (80 percent) and doctor's visits (84 percent) in retirement. Some even anticipate costs related to alternative medicine (29 percent) and cosmetic surgery (five percent), a snapshot of consumers' health care preferences today.

• Although 74 percent of respondents said they factored Social Security and Medicare benefits in their retirement plan, 77 percent are concerned about the financial issues facing these programs. Women are more concerned than men about the financial issues facing Medicare and Social Security.

• Thirty-one percent of pre-retirees would rather clean their bathrooms or pay bills than plan for retirement.

• Thirty-six percent of pre-retirees say they spent more time on home improvements than they did planning for retirement in the past year.

• Eighty-three percent of those surveyed could not correctly identify Medicare Part D, which provides Medicare beneficiaries with coverage for their prescription drug costs beginning January 1, 2006.

• Fifty-three percent of Americans surveyed would choose health benefits, if they had a choice between receiving health benefits (paid for to supplement Medicare) or a pension in retirement.