If you don't have enough money for retirement, from income and assets, you probably are going to have trouble paying for medical care. Yet in all the public discussions about cutting the deficit and federal spending including Social Security and Medicare, there has hardly been a word about budget solutions that consider the relationship between retirement income and health care expenses. Meanwhile, more current retirees are finding themselves in a pickle and soon-to-be retirees will, too.
A provocative op-ed in the New York Times a few weeks ago illuminated this reality. Teresa Ghilarducci, a pension expert who teaches economics at The New School for Social Research in New York City, wrote that seventy-five percent of Americans nearing retirement age in 2012 had less than $30,000 in their retirement accounts. Ghilarducci added:
The specter of downward mobility in retirement is a looming reality for both middle-and higher-income workers. Almost half of middle-class workers, 49 percent, will be poor or near poor in retirement, living on a food budget of about $5 a day.
Ghilarducci didn't mention the heavy health care expenses many people face as they age. So I contacted her and asked how retirees pay for medical care. "We know that the elderly get reimbursed for about half of their medical expenses,"? she tol me. "Seniors between 65 and 70 are spending down assets quicker than they should and quicker than they had expected. At age 70 they see that cash flow is getting tight so they start missing doctor's appointments and medication doses."?
"The real concern is around chronic diseases like diabetes and high blood pressure,"? Ghilarducci said. "Aging is a gateway to poverty." Between ages 70 and 75, seniors learn at mealtime what that means. They economize where it's easiest---with food. Ghilarducci put it this way: "They give themselves a raise by skipping meals."
As more seniors find themselves paying more for health care because of recent changes in Medicare benefits (which I will explain in the post that follows) more seniors will be skipping more meals. Without food, it is hard to recover from surgery or manage chronic illnesses like diabetes. And since a balanced diet is a major determinant of good health, these newly poor seniors are likely to be ill as well as hungry.