There are seemingly endless reasons to be health-conscious and focused on well-being. Eating right, sleeping well, exercising, and managing stress are active measures people take toward a happier, healthier life. Physical health also has connections to financial wellness. For working individuals nearing retirement, a holistic approach to health and wellness that includes a robust financial plan sets the table for a smooth and stress-free transition away from the daily grind of work life.
Those who prioritize their health are building the foundation for a successful entry into retirement in several ways. For example, addressing social needs and creating a sense of fulfillment can foster a positive outlook. This may include staying active, engaging with the community, traveling, volunteering, and devoting time to a hobby. A study published in the National Library of Medicine concluded that volunteering approximately two hours per week was associated with reduced risk of mortality and physical functioning limitations, higher physical activity, and several beneficial psychosocial outcomes in older adults. [1] Additionally, research has shown that those who feel a sense of purpose in retirement have less stress and more mental and emotional space for fiscal planning and upkeep. By maintaining their physical and financial health in retirement individuals can have a greater chance of retaining their independence as they age.
Conversely, individuals who neglect their well-being and don’t find a sense of purpose and social connection can develop mental health and physical issues in retirement. According to an article in Johns Hopkins Medicine, the risk of heart disease and other medical conditions among these individuals can increase by as much as 40%. [2] Chronic disease and comorbidities diminish the quality of life in retirement. They may render retirees unable to work, volunteer, or participate in certain community activities. They increase medical costs and life insurance rates and can cause some individuals to become ineligible. These factors can result in a bleak outlook which is also diminishing and can contribute to poor financial outcomes. According to Cornell University and Medica Research Institute’s 2017 study, people with depression and anxiety had 67% lower retirement savings as a share of their overall assets compared to those who were not experiencing psychological distress. [3] While it’s a chicken-and-egg situation determining whether mental health conditions cause financial strain or vice versa, the correlation is there.
Better health means lower medical costs however, healthcare costs rise with age regardless of whether a person is in good or poor health. With increased longevity, even the healthiest individuals can outlive their savings, especially if they reach a point of needing long-term care. According to Fidelity’s Retiree Health Care Cost estimate, the average retired couple aged 65 needs approximately $315,000 to cover health care expenses in retirement in 2023. [4] Adequate financial resources ensure that retirees have access to quality care, which includes regular check-ups, treatments, and medications. Financially secure individuals are more likely to seek timely medical attention, leading to better health outcomes. Here are some ways to prepare for a healthy retirement:
Preventative care—Individuals can invest in their future with a healthy diet and lifestyle, routine exercise, and regular check-ups with their primary care doctor. This can lead to early detection and treatment of health conditions and reduced medical costs.
Insurance—Individuals nearing retirement should have adequate health insurance to offset high medical expenses and provide access to necessary healthcare services. This may also mean a supplemental insurance policy in retirement beyond the standard Medicare retirees become eligible for at age 65. Additionally, a long-term care policy may absorb costs that regular health insurance does not cover.
Professional Guidance— One of the healthiest things an individual can do is to create a plan that includes all aspects of life in retirement. A financial advisor can help clients mentally, emotionally, and financially prepare for their future. Advisors encourage savers to envision their lives in retirement. They prompt them to consider their needs and wants and how they might fulfill them. They create a realistic framework for saving and spending that helps individuals get the most out of what they have for as long as possible, which includes provisions for healthcare costs, inflation, and market volatility.
“What we see is that when people have a plan, hope can begin to increase,” said Oscar Jiménez-Solomon research scientist at the New York State Psychiatric Institute. “One of the key components of hopeful thinking is to feel that you have concrete pathways to achieve the things that matter to you and your life goals. Having a sense that there’s a way out of your situation can have an important financial and mental wellness impact.” [5]
Financial Discipline—Savers should practice living below their means and start saving early and consistently. They should take advantage of employer matches to retirement accounts and diversify their investments to mitigate risk and maximize benefits.
The connection between physical and financial health is symbiotic. Good physical health can reduce healthcare costs and extend the life of retirement savings, while good financial health can reduce stress and provide the means for maintaining physical health. Investing in health and managing finances wisely are the cornerstones of a secure and enjoyable retirement. Click HERE for a free financial wellness check at SHP Financial.
Sources
[1] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7375895/
[2] https://www.hopkinsmedicine.org/health/wellness-and-prevention/protect-against-a-retirement-risk
[3] https://news.cornell.edu/stories/2017/09/anxiety-depression-can-diminish-retirement-savings
[4] https://www.fidelity.com/viewpoints/personal-finance/plan-for-rising-health-care-costs
[5] https://www.cuimc.columbia.edu/news/link-between-health-and-financial-well-being
