Will Good Health Save You Money in Retirement or Not?

Last Updated May 20, 2010 11:09 AM EDT

Take care of your health, and you might save money on medical bills in retirement -- that's the conclusion of my May 11 post, How to Spend Less in Retirement. But on the same day, fellow CBS MoneyWatch blogger Carla Fried posted Uh-Oh: Good Health Will Cost You More in Retirement. So what gives? Should you try to stay healthy or not?

Yes is my answer to the question, and actually, Carla agrees with this conclusion, if at least to better enjoy her retirement. But what about the apparent contradiction of these two posts regarding the costs of health care: Does taking care of your health have the potential to save you money or not?

In my post, I quoted a study from Fidelity Investments that estimated the amount of money that a 65 year-old couple retiring today would need to have in the bank to cover all future out-of-pocket medical costs. This study excluded the costs for long-term care. In her post, Carla quoted a study from the Center for Retirement Research at Boston, which also estimated the same "in the bank" number, but that included the costs for long-term care. According to this latter study, if you take care of your health, it's more likely you'll live longer, giving you a longer period over which to incur medical expenses. And you'll be more likely to live to an age at which you'll be frail and need institutional long-term care, which can be very costly. Hence the conclusion that good health today could lead to higher medical expenses over your lifetime.

This issue gets right to the heart of an often overlooked threat to your retirement years -- the potential for ruinous bills for long-term care. Carla points out that the insurance salespeople are all over this subject, wanting to sell you long-term care insurance, and I agree with her observation. Whether or not you should buy long-term care insurance is a very complex decision, and there are no easy answers. I do, however, believe that everyone approaching or in retirement needs a strategy to address the threat of high long-term care expenses. This strategy may or may not include buying LTC insurance, depending on your goals and circumstances. I'm currently researching and writing a series of future blog posts that will describe and compare different strategies for addressing long-term care expenses.

It's important to note, however, that both studies cited above are based on many assumptions about the future, using medical cost estimates and averages for a broad population, and on elaborate statistical models. But what about you -- can you beat the averages? Do these statistical models dictate your destiny, predicting that you'll be wiped out by high costs for long-term care?

My personal goal is to "live long, die fast." I want to live a long, healthy life; then one night, in my late nineties or hundreds, I'd like to go to sleep and the next morning "wake up dead." Is this possible? I choose to believe that it is, and that I'll increase the odds of this happening by eating the right kinds and amounts of food, getting proper exercise, and managing my stress. Of equal importance: I need to have powerful reasons for getting up in the morning -- continued engagement with life and a rich social life.

These are the strategies advocated by John Robbins, author of Healthy at 100: The Scientifically Proven Secrets of the World's Healthiest and Longest-Lived Peoples. John studied populations around the world who live long and live well, and the science that supports why these populations live so well. Here's a fascinating interview on this topic that I had with John; it comes from my DVD, The Quest for Long Life, Health and Longevity. For an inspiring example, check out this video clip, also from The Quest, introduced by Dr. Bob Hoffman, author of Discover Wellness: How Staying Healthy Can Make You Rich. It shows Doris Eaton Travis, the last surviving Ziegfeld Follies girl, dancing at age 101.
As a poignant follow-up to this clip, Doris died a few weeks ago at age 106. She was dancing on Broadway two weeks before her death - a clear example of how you can live a long, healthy life.

Being a numbers guy, I respect statistical studies like those mentioned above. But I choose to be inspired by Doris!
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    View all articles by Steve Vernon on CBS MoneyWatch»
    Steve Vernon helped large employers design and manage their retirement programs for more than 35 years as a consulting actuary. Now he's a research scholar for the Stanford Center on Longevity, where he helps collect, direct and disseminate research that will improve the financial security of seniors. He's also president of Rest-of-Life Communications, delivers retirement planning workshops and authored Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck and Recession-Proof Your Retirement Years.

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