The Effect of Out-of-Pocket Spending for Health Care on Economic Preparation for Retirement

Published: 2010
Project ID: UM10-18


In research previously funded by the Social Security Administration through MRRC, we estimated the fraction of households aged 65-69 who were adequately prepared for retirement by finding whether their economic resources could sustain an empirically estimated life-cycle consumption path.  The only source of uncertainty in the model was longevity. The level of spending by each household was affected by average spending on health care but not by health spending shocks.  In the proposed research, we will explicitly take into account the risk of out-of-pocket spending on health care to find, via simulation, the fraction of households financially prepared for retirement.