The single largest expense of the retirement economy is healthcare. Among those who are working, but are approaching retirement, or those who have actually retired, 34.9 percent reported that healthcare represents their highest expense.
In terms of research findings, bank statements and calendars provide two of the most credible indicators into the present priorities of this population’s future. Remember that in spite of the media coverage regarding Wall Street or the decisions of the Federal Reserve, 68 percent of the economic equation is driven by individual expenditures. The Retirement Economy is, and will remain, a function of the increased need to fund medical expenses.
Here’s why:
Life Expectancy
The current local life expectancy is 76.9 for men and 81.4 for women. However, the life expectancy among those retired or planning to retire is 88.3 years — nearly nine years longer. Which of these two statistics is correct? Both. The economy is about what is currently occurring, but equally critical are the future expectations that determine the developing consumer behavior trend.
It is very possible that a longer life expectancy has a high probability of actually occurring when advances in health care prevention and exceedingly effective treatments are developed. At the same time, there is a high likelihood that the total healthcare expenditure, which is 15.3 percent of GDP, will increase.
Life Changes
Without question, DNA in its current unaltered form determines life expectancy. Accidents, chronic illness, and infectious disease are other major contributing factors. However, beyond this, alterations to life expectancy are the response to life changes.
Inputs from family, friends, employment, major illness and careers cause occurrences that initiate life changes. Life occurrences can result in an immediate, unique, and short-term response which often become a continuous function or pattern that far exceeds the time line of the event itself.
The Retirement Economy has been based on acquiring funding to maintain the desired lifestyle after retiring. When a large sample of local respondents was asked to rate their desire of maintaining their current lifestyle on a scale of 0 to 10, with 10 meaning highly desires, they reported an average score of 7.45.
Furthermore, the research discovered two additional findings. First, as age increases so goes the importance of maintaining the desired lifestyle. Second, those who have retired report an even higher rating on this variable than those who are still working.
Continuing to work, therefore, seems to be a method used solely to assure that this desired lifestyle will be achieved.
Jim Hebert is the president and founder of Hebert Research, Inc., an international real estate, land use, and statistical research firm in Bellevue.
