Merrill Shows How Healthcare Costs Are Hurting Clients
Financial advisors may want to pay closer attention to how healthcare expenses are affecting the lives of their clients and prospects. Rising healthcare costs are having a major impact on employees’ overall financial well-being, according to a new study from Merrill Lynch.
Healthcare costs have gone up for 79% of employees, compared to 69% who said so in 2015, according to a national survey of 1,242 participants in 401(k) plans conducted last fall by Merrill Lynch. And the majority of respondents say healthcare expenditures are affecting their financial lives: 56% of those who say they saw increases are now spending less and saving less for their other financial goals, according to the study. While 66% are cutting into their recreation and entertainment budgets, 63% are reducing how much they save for retirement and 48% are cutting back on paying down debt, Merrill Lynch says.
The survey found 39% of those trying to meet rising healthcare costs are doing so at the expense of contributing to their retirement accounts. No wonder, then, that 75% of employees polled “feel fear” when it comes to financing healthcare.
Financial advisors may be able to play an important role. A full 50% of respondents have no idea how to estimate current or future out-of-pocket healthcare expenditures nor how much they should be saving to prepare, according to Merrill Lynch. And 23% don’t save past a year of healthcare expenditures while the majority underfund their saving for healthcare, the study found.
Meanwhile, 54% feel overwhelmed by information on retirement-related healthcare costs and insurance while 49% find that information confusing, Merrill Lynch says.