For two-thirds of Americans, Medicare's solvency woes spark retirement fears

Doubts and fears about the future of Medicare are on the rise, with 63 percent of Americans worried the program may not be available when they retire, according to a survey by the Nationwide Retirement Institute.

The  2024 Nationwide Retirement Institute Health Care Costs in Retirement consumer survey found that Medicare is a top-of-mind issue, with one in five respondents citing the program's potential insolvency as their most important retirement planning concern.

The rising uncertainty surrounding Medicare is leading many to call for reforms. Looking ahead to the 2024 US presidential election, 42 percent of Americans in the survey say ensuring Medicare’s stability should be a priority for the next administration, just behind lowering out-of-pocket health care costs (43 percent) and prescription drug prices (43 percent). The support for these reforms cross political lines, the survey noted, with 47 percent of Democrats and 43 percent of Republicans agreeing on the need to stabilize Medicare.

“Concerns about the future of Medicare are adding another layer of uncertainty for Americans as they consider how they'll manage health care costs in retirement,” Kristi Martin Rodriguez, senior vice president of the Nationwide Retirement Institute, said in a statement. “With high living costs already squeezing household budgets, many are worried about having enough saved to cover their long-term health care.”

Health care costs remain a significant financial burden for many Americans. The survey found that 67 percent of respondents fear a large health issue could devastate their finances, and nearly half (49 percent) said that medical expenses have drastically reduced their retirement savings. Additionally, 44 percent stated they would be unable to pay off a $5,000 out-of-pocket health care expense.

Many Americans are optimistic about the role artificial intelligence could play in improving health care, with 53 percent expecting AI to enhance quality of care and 33 percent believing it could lengthen their life expectancy by an average of 10 years. However, this extended longevity has also raised concerns among 62 percent of respondents who fear they'll outlive their retirement savings.

Respondents might be taking major risks, the survey suggests, as 66 percent admit they don't work with a financial professional. That's despite the fact that 54 percent were unable to estimate the yearly health care costs they're facing or are likely to face in retirement, and another 34 percent said they do not know how to go about using Medicare to cover their medical expenses in retirement.

And while a resounding 83 percent of Americans agreed managing health care costs should be integral to financial planning, including 37 percent who strongly agree, a 57 percent majority said the financial professional they work with hasn't given them advice on how and when to apply for Medicare benefits. Those data points, Rodriguez said, should be a call to action for advisors to address those questions head on.

“Advisors should proactively address health care costs, from Medicare to AI's potential impact on life expectancies, to help ensure their clients' savings last as long as they will need to,” she said