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2019 Wellness & Wealth: Consumer Insights

7 min read

30 sec brief

New survey reveals Americans under 35 unable to save for retirement, pay down debt, or buy a house

Healthcare costs leave young adults unable to take care of themselves today AND prepare for health and financial needs tomorrow. Lively finds the majority of Gen Zers and Millennials have cut back spending on wellness activities due to healthcare costs, including decreased spending on hobbies (42 percent) and putting off or canceling vacation plans (31 percent). They’re also not able to afford preventative care (63 percent) and are being forced to forego retirement savings (29 percent) and debt repayment (31 percent). This data shows healthcare costs are preventing financial independence for even the healthiest populations, and making it impossible to prepare for the enormous cost of healthcare in retirement.

Lively today released the second part of the company’s inaugural Wellness & Wealth: Consumer Insights study that shows Gen Z and Millennials are the generations hit hardest by rising healthcare costs despite being the healthiest. The data shows healthcare costs prevent financial independence for Millennials and Gen Z. Conducted by CITE on Lively’s behalf, the survey sheds light on the everyday financial sacrifices forced on Americans due to rising health-related expenses.

“The reality is that healthcare in retirement costs ($369,000 per couple) more than the average price of a home ($231,000) in America today,” said Shobin Uralil, COO and co-founder of Lively. “The data shows that young people aren’t as financially independent as their parents may have been - homeownership is down and middle-class life is harder to attain. While buying a home is not essential to success, being able to take care of yourself throughout your life is. You may be stuck in a cycle of savings for future finances, while healthcare costs continue to increase.”

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Methodology

A survey of 1,000 randomly selected U.S. Adults (ages 18 and older) was conducted from June 5-6, 2019 to gauge physical and financial health decisions across the U.S. Respondents were asked ten questions about their personal finances and knowledge as they pertain to healthcare, health practices, ability to pay for health-related expenses, and insurance coverage. The survey was commissioned by Lively and executed by CITE Research, and is part one of a series of findings about employee wellness and wealth. Part two of the results will be released later this year.

Key findings of the Wellness & Wealth: Consumer Insights Report show:

Constant sacrifice: Healthcare costs prevent financial independence and inhibit retirement savings.

  • More than half (52 percent) of adults have had to prevent or delay important financial milestones as a result of healthcare costs

  • Saving for retirement (25 percent), going on vacation (24 percent) and paying down debt (23 percent) all take a backseat to healthcare costs.

  • Nearly eighty percent of Americans agree that rising health costs make it difficult to save for retirement and prevent financial independence.

  • Caught in the middle: Young adults can’t save for now or later.

  • The majority of Gen Zers have cut back spending on activities due to healthcare costs, including decreased “fun” spending and/or hobbies (50 percent), delayed vacation plans (38 percent), and paying down debt (31 percent)

  • Gen Z is the most likely group to put off going to the doctor (59 percent) or only go with something catastrophic happens (38 percent)

  • Two out of every three Gen Zers (63 percent) have avoided a doctor’s recommendation due to cost.

  • Families in jeopardy: Americans not ready to cover unexpected healthcare costs for themselves, much less others.

  • Nearly 50 percent of Americans are not prepared to incur the costs of their own unexpected injury and/or serious or chronic illness.

  • Over half of adults surveyed (56 percent) are unprepared to care for a sick or aging parent.

  • Women are more likely to feel unprepared to care for a sick parent than men (62 vs. 50 percent).

“Though this data is bleak, consumers can take their lives back and get on track for a healthy and relaxing retirement through wise and consistent savings,” says Uralil.

Below are strategies consumers can use to help prepare for future financial success:

Savings Tips to Help Prepare for Retirement

  • Take advantage of employee benefits: This open enrollment season, meet with your human resources department to be sure you are enrolled in and taking advantage of the full suite of employee benefits offered. If your employer has a 401(k) match program and you’re not contributing up to the max, you could be leaving money on the table that would help jumpstart a healthy retirement account. Take the time to create a personalized healthcare benefits package based on your lifestyle’s needs and costs. This could mean taking advantage of an HSA or FSA to pair with an eligible health plan.

  • Start saving now for healthcare: Knowing that healthcare is one of the most expensive parts of retirement, now is the time to set aside money to prepare. If you qualify, open up a fee-free health savings account -- an investable account that stays with you and offers unmatched tax advantages. In 2019, individuals can save pre-tax dollars (up to $3,500) into an HSA, reap the benefits of compound interest, and withdraw tax-free at any time for qualified medical expenses. Families can save up to $7,000. Bonus - adults aged 55 and up can add an extra $1,000 to each of those numbers.

  • Create a budget and stick to it: It is not surprising that healthcare costs are hitting young people the hardest. It is predominantly young people who are just getting on their feet in their career, with little savings and often little knowledge of how to start, and how much to save. Our recommendation is to make a plan, find out how much you need to save annually in order to reach a healthy margin in retirement, and then set goals to get there. And keep them. This can be hard in the era of instant purchases and instagrammable moments -- but there’s truly no better way to build savings than to simply not spend.

  • Build an emergency fund: A good practice is to prioritize setting money aside in an “emergency fund,” typically a few months of living expenses, in case you lose your job or experience a change in your life. You can make this goal easier for yourself by setting up automatic transfers, to help build a healthy buffer in times of need.

  • Set aside money for “fun” activities: Another finding from the report showed that young people are foregoing vacation and other “fun” activities and hobbies due to healthcare costs. This can cause burnout and further impact health and wellness. If you’re able, set goals and put aside money for “fun” things like vacations, trips, events, activities, and weddings.

  • Consult a financial professional: Whichever stage of life you’re in, it could be a good idea to get the help of a financial adviser to help you set goals and prepare for a successful financial future. It’s not easy to predict what you’ll need in the long-term, especially taking into account family, health, and unexpected life events. Consulting a financial professional can help you get on the right track today to begin saving and setting goals.

Download Wellness & Wealth Report

Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.

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