New
Service for TodaysSeniorsNetwork.com
readers...roll mouse over, click on
highlighted links in stories to review items
from Amazon
Now, keep up to date
with daily feeds of newly posted stories
about America's Seniors...click on the box
to the left
Health "Shocks"
diminish wealth more later in life
Newswise — A new study
underscores the need for seniors to maintain
their health -- in order to maintain their
wealth.
Building on a 2003
study that found that healthy seniors are
more likely to retain their savings, Ohio
State University researchers have now
discovered that the later in life a serious
illness occurs, the more damage it does to a
person’s finances.
The study found that
when seniors develop a new and serious
health problem -- experiencing what the
researchers call a “health shock” -- early
in retirement, they lose a substantial
portion of their savings immediately. But if
they experience the health shock later in
life, they will lose even more.
Study participants over
70 years of age lost 40 percent more of
their savings than similar seniors who were
just four years younger.
The results appear in a
recent issue of the Journal of Population
Economics.
The impact of health
problems on seniors’ finances has been
studied over the years, but scientists have
drawn different conclusions -- in part
because they measured health and wealth in
different ways, said Jinkook Lee, professor
of consumer sciences at Ohio State.
This study is the first
to gather a long-term perspective on how
chronic illness diminishes seniors’ wealth
over time.
“When someone has a
chronic health problem, they tend to find a
way to manage in their daily life, but
financially, the negative effect doesn’t go
away,” Lee said. “If you develop diabetes,
for instance, it costs you for your entire
life.”
She and coauthor
Hyungsoo Kim of the University of Kentucky,
Lexington, have been tracking the health and
wealth of seniors using a broad based,
national survey: the National Institute on
Aging’s Asset and Health Dynamics of the
Oldest Old (AHEAD) survey.
In a 2003 study of
AHEAD data, they found that seniors who
maintain their health are 6 to 7 percent
more likely to retain a significant portion
of their savings, compared to those who
suffer from health problems.
This new study compared the long term
financial repercussions of pre-existing
chronic health problems with those caused by
the sudden onset of a new health problem
late in life. Lee and Kim focused on five
common and serious health conditions:
diabetes, cancer, lung disease, heart
condition, and stroke.
They examined how the
wealth of more than 5,500 AHEAD participants
changed between 1995 and 2002. All were aged
70 or older at the start of the study.
When participants
developed a new and serious health
condition, the researchers categorized those
incidents as a “health shock.”
The later in life that
health shocks occurred, the more they
diminished a person’s wealth, the
researchers found. In 1998, participants who
had recently experienced a health shock lost
an average of 5.5 percent of their overall
wealth as a result. But when they were two
years older, the average loss for a health
shock was 8.7 percent of wealth.
When they were four
years older (in 2002), it was 9.5 percent --
40 percent more than when the participants
were first studied in 1998.
“If you have a chronic
health condition, it diminishes your wealth
throughout your life. And if you get a
health shock, it diminishes your wealth even
more,” Lee said. “Though over time the costs
associated with that shock may decrease,
that illness will still deflate your wealth
continuously thereafter.”
To Lee, this research
demonstrates how costly healthcare is to
Americans, even if they have Medicare
coverage.
Medicare typically pays
a little over half of someone’s medical
bills, and seniors -- most of whom are
living on a fixed income -- are forced to
make up the difference by dipping into their
savings. Add to that the fact that Americans
are living longer, and the cost of
healthcare keeps increasing.
Even if seniors can
recover physically from a health shock, they
can’t recover financially.
“If we have some kind
of health shock during our working years,
maybe we are lucky and we have good health
insurance from our job. Or maybe we can go
out and get a second job or try to work
longer hours to make up the cost. But
seniors are past the age when they can do
that,” Lee said.
The lesson, she said,
is that even average Americans need to give
serious thought to the health care system,
and plan for their retirement with
healthcare costs in mind.
People with chronic
diseases in their family history can talk to
their doctor to learn about the likelihood
of developing these diseases themselves.
And then they can try
to make better estimates of what their
healthcare costs will be after they retire.
They can also try to live healthier lives
with the goal of staving off these diseases.
As part of her
continuing research, Lee is traveling around
the world to examine how different
healthcare systems impact people’s wealth.
She is focusing on how universal healthcare
systems, such as those in France and Canada
-- and now, even in developing countries
like Korea -- are easing the burden of
citizens’ healthcare costs.
...
...
...