For most Americans, fear regarding running out of money is still a top concern related to retirement. But money isn’t the only factor that determines a successful retirement. The dreams and desires of people are very diverse, and there is a growing number of Americans of all ages who put a very high value on non-financial matters such as health, lifestyle, experiences, knowledge, time, and relationships.
Health is one of the biggest non-financial factors that impact a successful retirement. Health can have a direct impact on a person’s finances during retirement in two big ways:
Good health has a positive correlation with higher income (see The Effects of Income on Health in the Review of Economics of the Household); and,
Healthcare costs increase as we age (see Healthcare Costs by Age by RegisteredNursing.org).
As financial planners know, there are several determining factors that can help a person increase their retirement nest egg over time. For example, investing properly and living beneath your means are good ways to increase your retirement savings. Similarly, healthcare professionals have looked into factors that can determine whether a person is likely to have good health. These factors are called Social Determinants of Health, and the US Department of Health and Human Services website has more information.
Social Determinants of Health
Social Determinants of Health are factors that may affect many health and related quality of life outcomes. The five categories of Social Determinants of Health are:
Economic Stability
Education Access and Quality
Health Care Access and Quality
Neighborhood and Built Environment, and
Social and Community Context
Let’s look at what a financial advisor should know about each category.
Economic Stability
Financial advisors are in the business of helping people improve their finances to provide greater economic stability. With greater economic stability, a person has a better chance at improved health and quality of life.
Education Access and Quality
Financial advisors are often called to help people plan their college funds and other education-related expenses. On average, people with higher education will live healthier and longer lives.
Health Care Access and Quality
Financial advisors are directly involved in helping people save for future health care costs or purchase adequate health care or long-term care insurance. Proper insurance and savings for medical treatments help people access and afford the health care that they need.
Neighborhood and Built Environment
While creating a retirement plan, financial advisors frequently discuss where a client is planning to live during retirement. The neighborhood that a person lives in is another factor that can impact their future and current health.
Social and Community Context
Financial planners often have discussions with clients regarding their families and how clients plan to distribute funds as part of an estate planning review. Family, friends, and other members of a person’s community that provide social support can help people live longer, healthier lives.
The relationship between health and wealth is often underestimated by financial advisors and their clients. A quick review of the Social Determinants of Health makes it clear that there are many surprising parallels between health and a client’s financial goals. To learn more about the relationship between money and aging, please review our other Guide Change blogs.
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