Latest research in Jackson’s Security in
Retirement Series exposes critical gaps in retirement healthcare
planning amid rising costs of care and increased life
expectancy
Nearly two-thirds of pre-retired investors
surveyed are underestimating their expected healthcare expenses in
retirement
Only 27% of investors surveyed believe they
will require long-term care — yet 70% of individuals turning 65 are
likely to need this type of care
Jackson National Life Insurance Company® (Jackson®), the main
operating subsidiary of Jackson Financial Inc.1 (NYSE: JXN), today
released key findings on how retirees and financial professionals
perceive healthcare risk and the associated impacts on retirement
income planning, including costs of healthcare and long-term care.
The study is the third installment of Jackson’s Security in
Retirement Series, conducted in partnership with the Center for
Retirement Research at Boston College, and follows the initial
longevity risk and inflation risk studies released over the past 15
months. The multi-phased research initiative aims to provide
useful, actionable, research-based insights on a variety of
potential threats to financial security in retirement.
Jackson’s research reveals a notable gap between individuals’
perceptions of healthcare and long-term care costs and their
overall financial preparedness, underscoring the need for better
retirement planning. The findings reveal critical risks once
retired, particularly in light of rising healthcare expenses,
longer lifespans and the increasing prevalence of chronic
conditions, all of which highlight a growing need for proactive
planning to achieve a secure retirement.
Key findings from the research include:
- Healthcare costs are grossly underestimated. Nearly
two-thirds of pre-retired investors surveyed are underestimating
their prospective healthcare expenses in retirement, anticipating
health care expenses at least $1,220 below the $8,600 annual
estimate and possibly increasing their healthcare risk.2
Additionally, only 27% of investors surveyed believe they will
require long-term care at some point in their lives, however, 70%
of individuals turning 65 each year are likely to need this type of
care at some point in their lives.3 This is particularly notable,
as Jackson’s recent longevity risk study found the vast majority of
investors inaccurately predict their life expectancy, increasing
retirement income planning risk.
- Rising costs and advancements in technology increase
financial burden. Advances in medical technology and treatments
are expected to increase healthcare costs significantly over the
next decade. The price of medical care including services,
insurance, drugs and equipment has increased by over 120% since
2000,4 leaving many retirees at risk of draining their savings.
These findings align with insights from Jackson’s 2024 inflation
risk study, which examined how pre-retired households struggle to
adapt to rising costs of essential expenses, including healthcare,
in the face of inflation.
- Investors are considering asset spend-down to qualify for
Medicaid. More than 60% of investors surveyed said they plan to
or may consider spending down their assets to qualify for Medicaid
as a long-term care funding solution but may be underprepared for
the dramatic life changes that would come with spending down their
assets.
- Concerns over long-term care costs are amplified among
financial professionals surveyed. Two in five financial
professionals are concerned that clients will be unable to afford
acceptable care, with 56% citing this as a major risk for
retirees.
- Personal experience drives better preparedness.
Respondents who have seen family members require long-term care are
nearly twice as likely to believe they will need similar care. This
group is also more proactive in exploring costs, adjusting
retirement timelines and planning for assisted living
expenses.
- Women face unique challenges. Women leading household
financial decisions express higher concern about healthcare risks
but are less likely to anticipate requiring long-term care despite
longer life expectancies. Many report lower income and asset
levels, yet they are three times more likely than men to be
caregivers for family members.
“Retirement should be a time for security and stability,
however, our research shows many households may be unprepared for
the realities of the healthcare challenges and expenses they will
face,” said Glen Franklin, Assistant Vice President of Research,
RIA and Lead Generation Strategy for Jackson National Life
Distributors LLC (JNLD), the marketing and distribution business of
Jackson. “Our research is particularly timely given potential
policy shifts resulting from the election outcome, as proposals
addressing healthcare reform and federal funding for long-term care
programs could significantly impact retirees’ healthcare costs and
savings strategies. This further underscores the importance of
working with financial professionals to prepare for an evolving
landscape and proactively address healthcare risks in investors’
retirement plans."
“These new survey data should be a wakeup call for policymakers,
financial professionals and older Americans themselves,” said
Andrew Eschtruth, Director of the Center for Retirement Research at
Boston College. “We are particularly concerned that too many people
nearing or in retirement don’t have a good grasp of their potential
healthcare needs and out-of-pocket costs, which could narrow their
options when it comes time to pay the bills.”
The research, fielded between July 12-August 2, 2024, included
online surveys of more than 400 financial professionals and 500
investors with at least $100,000 in financial assets between the
ages of 48 and 78 years. Respondents were required to participate
in, or lead, household financial decision-making.
Jackson’s ongoing work with the Center for Retirement Research
at Boston College aims to help retirement investors and financial
professionals better navigate financial challenges and mitigate
risks to retirement income planning. Part one of Jackson’s Security
in Retirement Series focused on longevity risk, or the risk of
outliving income when faced with the possibility of living longer
than expected, and part two of the Series focused on inflation
risk. Future studies will explore and analyze a selection of other
critical risks impacting Americans’ security in retirement, such as
market dynamics and policy risk related to government programs.
To access details and up-to-date findings relative to this
research as well as other proprietary research materials developed
by Jackson on topics that impact the saving and spending habits of
Americans, visit www.jackson.com/researchcenter.
ABOUT JACKSON
Jackson® (NYSE: JXN) is committed to helping clarify the
complexity of retirement planning—for financial professionals and
their clients. Through our range of annuity products, financial
know-how, history of award-winning service* and streamlined
experiences, we strive to reduce the confusion that complicates
retirement planning. We take a balanced, long-term approach to
responsibly serving all our stakeholders, including customers,
shareholders, distribution partners, employees, regulators and
community partners. We believe by providing clarity for all today,
we can help drive better outcomes for tomorrow. For more
information, visit www.jackson.com.
*SQM (Service Quality Measurement Group) Call Center Awards
Program for 2004 and 2006-2023. (Criteria used for Call Center
World Class FCR Certification is 80% or higher of customers getting
their contact resolved on the first call to the call center (FCR)
for 3 consecutive months or more.)
Jackson® is the marketing name for Jackson Financial Inc.,
Jackson National Life Insurance Company® (Home Office: Lansing,
Michigan) and Jackson National Life Insurance Company of New York®
(Home Office: Purchase, New York).
Jackson, its distributors, and their respective
representatives do not provide tax, accounting, or legal advice.
Any tax statements contained herein were not intended or written to
be used and cannot be used for the purpose of avoiding U.S.
federal, state, or local tax penalties. Tax laws are complicated
and subject to change. Tax results may depend on each taxpayer’s
individual set of facts and circumstances. You should rely on your
own independent advisors as to any tax, accounting, or legal
statements made herein.
This material should be considered educational in nature and
does not take into account your particular investment objectives,
financial situations, or needs, and is not intended as a
recommendation, offer, or solicitation for the purchase or sale of
any product, security, or investment strategy.
Annuities are issued by Jackson National Life Insurance Company
(Home Office: Lansing, Michigan) and in New York by Jackson
National Life Insurance Company of New York (Home Office: Purchase,
New York). Variable annuities are distributed by Jackson National
Life Distributors LLC, member FINRA. May not be available in all
states, and state variations may apply. These products have
limitations and restrictions. Discuss them with your financial
professional or contact the Company for more information.
Jackson® is committed to ensuring more Americans in or nearing
retirement can benefit from greater clarity and confidence in their
financial futures. To better support this important goal, we have
partnered with leading academic experts at the Center for
Retirement Research at Boston College to launch the Jackson
Security in Retirement Series. This multiphase research effort will
take a comprehensive look at a range of potential threats to
financial security with the goal of helping financial professionals
and retirement savers more effectively identify and manage them.
Jackson is not affiliated with the Center for Retirement Research
at Boston College.
Firm and state variations may apply. Additionally, products
may not be available in all states.
*Guarantees are subject to the claims-paying ability of the
issuing insurance company.
1 Jackson Financial Inc. is a U.S. holding company and the
direct parent of Jackson Holdings LLC (JHLLC). The wholly-owned
direct and indirect subsidiaries of JHLLC include Jackson National
Life Insurance Company, Brooke Life Insurance Company, PPM America,
Inc. and Jackson National Asset Management, LLC.
2 This is based on a subset of 114 pre-retired investors
surveyed and excludes those who indicated they were unable to
provide an estimate of annual household health care expenses.
3 Christine Benz, Morningstar, “100 Must-Know Statistics about
Long-Term Care: 2023 Edition,” March 29, 2023.
4 Shameek Rakshit, et al., Peterson-KFF Health System Tracker,
“How does medical inflation compare to inflation in the rest of the
economy?” August 2, 2024.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250122854732/en/
Media Contact: Patrick Rich Patrick.Rich@Jackson.com
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