COST AND SATISFACTION: TRADITIONAL VS HIGH- The Spending Patterns of Early vs. Late Retirees Can Differ Significantly D MO OT LIA VRG ATI EO RN H SS A AN BD A L M A EN AC SE USR A EM FF EE N CTT O UF S E F IO NF A NCIAL ® MOTIVATIONS AND MEASUREMENT OF FINANCIAL WHY ARE MORE WORKERS ELIGIBLE FOR HEALTH RETIREE EXPENDITURES Speakers A AR RE EA AS S O OF F H HE EA AL LT TH H C CA AR RHo E E useho S Sld P P Exp E E enN N ditur D D es I I by N N CaG G tegor y C C in 201 O O7 N N Dollar C Cs*E EN NT TR RA AT TI IO ON NS S RETIREMENT SECURITY PROJECTION MODEL FROM 401(K) TO IRA S FH UI TF U TR IE N G W E OQU RKITY HEALTH CARE SHARE D H MOW C A K PI L N M AG N U S C P H R A O N SJ A D E V C R IT N EIA G O D SN ? IS NESS FUTURE RESEARCH DEDUCTIBLE HEALTH PLAN ENROLLEES Evidence from retiree spending patterns challenges REFERENCES Q&A H WEEA LL LT NH E S CSA I RN EI T SI EA RT VIIV CEESS AND SPENDING? The Share of Health Costs Has Declined for Retirees Since 2007 R RE EF FE ER RE EN NC CE ES S P RR ET EI SR EE NM TA EN TITO R NE S OEU ATRC LIN HE WELLNESS INITIATIVES COVERAGE WHEN FEWER EMPLOYERS ARE OFFERING IT? Assets were much more likely to be in Our projections reveal reduced deficits for The breakdown of the out-of-pocket Average Asset Allocations Before and After Rollover From 401(k) Plan to IRA A A M Equ Famil vera ity ajo ies ge Allocatio rity R Who etireme ofs F e amil n He in nads t Defic ies 401 P Hav (k) arit an tic e PlLe ipate ans d ssPr Tha Befor o in jected a n Defi e On vs e Defi . n Mo After a R edci n C t R th on o ed trib f ollo u Emergen cti ution v oer n Un In (DC) Plan cy to de S r IRAs avings Two Are (R Scen ollo M ario v oer re sLikely the assu Of mpt thion e accou that peop nts thle can at sta re ted xpect wit th o spend a ?RSPM simulates the percentage of the A po veragpulatio e Annual Sha n re at of risk Health of Car e in not Ho h useho aving ld Expre enditur tire es ment for Ages 75+ all ag •High EBR e Amon cohor I analy -deductible tg s. Defi emplo zed cits y w ers a dat ould , plans there is be abase hav little e of continued to mone In Among the top y pr aftogre er a rollo ss ver from 20 a % 401of (k) health care spenders Having Access to Assistance , betw and Resoureen 30 ces That % - 40% hit their plan’s health costs for those ages 75 or older ?Simulating the Impact of HSAs By Ron R ollover etirement Balance Income Adequacy (Jack • In the pipeline less than 10 percent of assets Ba to By Ha Ag lances eve S u of ff $ ic5,00 ient 0 Emergen or More) cy Savings constant level — e.g., 75 percent of preretirement Looking at the distribution of Enable Good Financial Decisions significant income ly lo w adequat ered by the e ad todi ctov ion er of average expenses and uninsured health care costs ?Source: “Under the Dome – A Closer Look at Legisl • Compativ arede Pr to acc oposals Impa ountholders with less cting saved, This paper combined EBRI’s HSA Database into an IRA. Even though target- consensus on what financial health proliferca ate re claims data to indicates ? Med thatica most re bu ofy th -in e dr prop op os in al tot an al alysis out-of-pocket maximum ? allOpening ocated to equ Remar ities, ks: just un Jos der h Co half hen income ? ? — Sou Sou every rc rce: e: year “ “Comp Ho in ret w D irement arin o R.g A etirees sset ’ All Spending P ocation Bef attore ernsand A Chang fter e Ov a R er ollov Time? er ,F ” Za rom hra savings, a majority of families have auto On por ly 1 tabilit in y5 families . with working ?Projecting the Impact of Policy and Design Proposals on VanDerhei) (including long-term-care costs) at retirement age date/balanced funds (TDFs) were • Employer focus groups on the future of health care benefits accountholders with more than $3,000 saved in with health claims data from a large health R cost etirement welln s for thi ess look s ag ,” J s e lik gr ac eoup . k V is anDerhei, EBRI Issue Brief, no. 486 (Employee Benefit • How would employers’ health benefits be affected if older examine high-cost users of maintained a similar allocation when less hea th ds an un on der e mont age h of 65 ha thv eir in e enou come gh . Being Comfortable/Financially Secure Overall 401 Ebr ? Among ahimi, (k) Plans the EBRI Iss top to Individual 5% ue of heal Brief th , care no Retirement Accou . 49 spe2 (E nders mp , betw loyee ee nts n Benef ,60% ” Craig -it 70% R Copela esearc hit thei h In nd, r plan stitu EBRI ’ste out , Iss -of ue -po cket specifically designed to make the asset workers could transition to Medicare? th •eir HSA We will s be conducing roundtables with benefits executives to Scenar EBR io 1 I analy : Coverazed ge Enh data ancem frents om the Medical attributR ed etire to healt ment Income Ade h insurance and drugs, quacy (Jack VanDerhei) In general, spending declined during retirement. remplo olled ovy er to IRAs er . Of 401(k) plans 78% Zahra Ebrahimi, Research Research Institute, July 11, 2019). Temerg h healt e fam enc h ilie care y s sav with ing ths e most — three month savings s ?RSPM simulations are based on: allocation process automatic, assets are explore their point of view on how public policy make affect ?Simulation Analysis of the Impact of the SECURE Act on AUM (Jack maximum ?Part I: Retirement Research, Presented by Zahra Ebrahimi 75.4% •As part of the Financial Wellness Research Center, EBRI conducts a survey of Bri Octob ef, no er . 3, 2 495 01 (Emp 9). loyee Benefit Research Institute, November 7, 2019). while oth ? HSA er componen investmen ts t remain analysied s Expenditure Panel Survey (MEPS) to trace Also, the composition of spending changed over time: Workers Eligible for with more than 90 percent in Associate, EBRI health benefits in the future. The roundtables will also explore hof av e famil at leas y inc t ju ome st un in liq der uid tw savin o and gs a .* All emplo not being yers allocat (except ed the thos sa e me w with a fe y wwhen er ? Like in many areas, the 80/20 rule Being Equipped to Achieve Retirement Security Health Benefits • Visited their primary care physicians more frequently, unchanged for the most part. • Do HSA accountholders wait to accumulate a certain amount While housin ho HS emplo ? Finall w A balanc g insur y remai y, er am anc s’ ned ong financ es e tof he hav top fe la ial e rg r 1% inc est rw ate ellne of re sps end ased heal hav ss ing th e initiativ signific bee care n spe es antly nder s, 70% - 80% the hit next thei gener r ation plan of benefit ’s out- des of ign. -pocket equ VanDer ities, only hei30 ) percent still had W PRH H OO A JT E W C H TA P IN R PE P G P E A N TR H SE ED T O I M A A R PA E S C S FT E A TM O A IFLL IL P EO O S C L TIA O CTY IP O A AN Y N D than 10 employees) are required to offer Through Planning and Saving half months. they are rolled into IRAs. ?is Aapp set of licab det le er to mini hea stiltc h an cad redata-driven expenses including costs for necessities of money before investing? and spent $20 more on PCP care ?Part II: Financial Wellness Research, Presented by Jake Spiegel Families whose heads par HO ticipW ate in DO OLDER AMERICANS Moderated by: Josh cat def egor ined thy f is alloc contr or ev ib at ery ut ion ion ag when pl e an group s r . olled Ne , old w pla ov er er to ns hous arehold e s affe maxim cted um by the Affordable Care Act (ACA) • Center for Research on Health Benefits Innovation over the years. Has this affected health ? “How Much More Secure Does the SECURE Act Make American Workers: ?Stochastically modeled long-term costs ?What Happens to Asset Allocation When Participants Roll 401(k) ? ? 401 EBRI (k found )/HSA thsub at 20 stitu % tion of th effect e analysis DEW SIG HEN N FP O PRA R O R P E TX O IC PS IE P A N ALS N SE TO S S N W R O R HE LEL TN IR 401 L EO MS (EK IN N )T G P ILN AC NO ME auto-IRAs with a 6 percent default •The survey focuses on companies with at least 500 employees that are currently As t G a defin he iven siz th e ed of e lo rcon ollov w per trier bu cba en tion ta lances g (D e C) of gr pla ew n , the Being Proactive About Financial Awareness, Cohen, Managing IRAs. allocated a smaller share of their budgets to ? ?So “Sp urce: ending P “Emerg atter enc nsy Sa of O vin lder Households gs: The Reality ,” of Za W hror a kEbr ersahimi, ’ Liquid EBRI I Savin ssgs ue — Brief, ?Simulation Analysis of What Else Can Be Done to Increase Retirement Income • • Primar Visite y d c ar sp eecialists more frequently, and spent $30 more care usage? Planning, and Goals contri ? T br ut P aditio ar iont rIII: atnal e He thahealt talth auto-Care h plan escala, tes Pr users b es y ent 1 re ed por by teJd ake Spiegel SPEND THEIR ASSETS? population accounted for 84% of • To what extent does opening and contributing to an HSA averMore Ev agidence e asset wor alk locat F ers rom ions are EBRI’ were eligible s Retirement for workpla Security Pr ce- ojection Model®,” Jack VanDerhei, w are more l orkers witik h ely enou to ha gh sa ve vin suff gs, icient Director, Head of transpor offe tation ring an, d v cu aca rrently tions / ent in the ertaipr nment ocess and a of implementing, or planning to implement financial • Mental on spe health cialist care Plan Assets Into IRAs? (Craig Copeland) no Evidence . 480 (Emp rF edr ucom e 40 lo 1(k) def the Sur yee Benef errals? vey it R ofesearc Consumer h Institute Finances , Ma ,” y Cr 2, 2 aig 01 Copela 9). nd, EBRI Issue percent ?RS anPM nually sim unt ulates il it reac households hes 15 ’ wealth/income through their retirement including Social THEIR A S MSA EIT A N S D IE IN N Q C TU O O A M C IRE Y A S SO ? URCE? Adequacy After the SECURE Act (Jack VanDerhei) health spending, and the top 1% increasingly likely to look the same after eme priorit rgenc izing y savin lo gs w pr out og- rof am-s pocket costs, while Institutional Defined emerg sponso enc re y d savin healt gs. h coverage, despite fewer • Telemedicine larger share of their budgets to health care costs. EBRI Issue Brief, no. 501 (Employee Benefit Research Institute 0% , F 10% ebruary 20% 20, 30% 40% In w Th ellne shor ese ss t, us y initiativ ers es! are not p es articularly sensitive about cost-sharing arrangements percent of pay. It assumes 30 percent opt- ? Se Q/A curity, Usi define ng the d Health contributio and R n etir and eme IRA nt bal Studanc y (HRS) es, d an efd ined the Consump benefit annui tion an tie d sAct , and ivities net ? Flexible Spending Accounts (FSAs) a rollov ac er cou frnt om ed 401 for (k) 28 pl % of ans t o hea IRAs lth . The Brief, no. 490 (Employee Benefit Research Institute, August 29, 2019). provided by employers could • Visited outpatient physicians Co mor ntrie fr but equent ion, PlG y,I M and spent employers offering it. Why is that? high-deductible health plan users reported 47.5% Ho out wev for er, t ne he w elig aver ib ales ge an ann d inc ual lud shaes re al of l h non ea-lth costs • Consumer Engagement in Health Care Survey Provision of Education, Advice, and Tools 46.8% Employers Offering 20 ? As20 HSA bal ). ances increase, accountholders use Mail Survey (CAMS), we examine the spending behavior of retirees and near-retirees. • And, there are a wide variety of averhousing age equit •y equit al New locat Ey BRI ions databa w se ere is in the virw tua orkslly spending $551 more on outpatient care di ? re Do In ctly ben dividuals efit their w Coor orkers dinate Their and Withdrawals From Traditional and Roth IRAs? excludable employees. Promoting Financial Wellness ? Evidence suggests that workers are migrating Health Benefits for the •The 65–74 goal and 75 of t -or he -old sur er v ag ey e gr is oup to de s declin velo ed p a better understanding of financial wellness prioritizing low premiums • EBRI conducts this survey yearly, with a focus on tracing the several health care services and products more equal for balances of $50,000 or more. implementation strategies. ?Check our previous webinars on Spending Patterns of Older Americans on indi ? Cen rectl ter f y be or R nefesearc it them th h on Hea rough lth Benefits Innovation towards firms that are more likely to offer ? ? Fu Ho rthw ermore Prep , 15ar % of ed hig Are h Families to Pay for Expenses When Losing growth of high-deductible health plans and their impact on after 2007, the year after Medicare Part D went (Craig Copeland) Other ? initiativ RSPM es pr, oduces: how workers user them, and how they impact workers’ financial wellbeing frequently, and spend more on them Scenar Howev io er2 , t : he Cov aer lloca age tion Enh to anc TDF em s ents + higher employee satisfaction. the engagement, behavior, and attitudes of health care user coverag • e Study on impact of copayments vs coinsurance on use of health are spenders were inR the E top SE 10A % RC of H ROUND-UP WEBINAR PARP T PA A II R R:T T F I III I:N R :A E H N TE C IA R IA E LT M LH E W N CET A L R L RE N E S E TE S O A SP RC T IC OH S PICS ? the EBRI Join us on W Website ednesda . y, April 8, 2020, from 2–3 p.m. Eastern in a webinar into effect. Auto Portability consistently decrea servsed ices and , while spendintg he money Their Main Income Source? (Craig Copeland) This This This This r r r rep ep ep epor or or ort is t is t is t is c c c cop op op opyr yr yr yrighte ighte ighte ighted d d d b b b by the y the y the y the Emplo Emplo Emplo Employ y y yee ee ee ee Benef Benef Benef Benefit it it it R R R Res es es esea ea ea ear r r rc c c ch h h h Inst Inst Inst Institute itute itute itute (EBRI) (EBRI) (EBRI) (EBRI). . . . Y Y Y You ou ou ou ma ma ma may y y y c c c cop op op opy or pr y or pr y or pr y or print int int int this this this this r r r rep ep ep epor or or ort sole t sole t sole t solely ly ly ly f f f for or or or p p p pe e e erso rso rso rsonal and nal and nal and nal and nonc nonc nonc noncommerc ommerc ommerc ommercial ial ial ial use use use use, , , , p p p pr r r rovide ovide ovide ovided d d d tha tha tha that t t t a a a all ll ll ll har har har hard d d d Retirement, Medical, Bonuses, or Other Traditional 2014 2018 Jake Spiegel, Research ?Join us on Tuesday, March 17, 2020, from 2–3 p.m. Eastern in a webinar that • Workplace Wellness (Benefit) Survey Trspen aditio dinnal g for healt three or h plan four users years tended to be ? There has been a shift toward more full-time c c c cop op op opies ies ies ies r r r reta eta eta etain in in in a a a an n n ny y y y a a a and all nd all nd all nd all c c c cop op op opyr yr yr yright and ight and ight and ight and other other other other a a a ap p p pp p p plic lic lic lica a a ab b b ble le le le notic notic notic notices es es es c c c conta onta onta ontained ther ined ther ined ther ined therein, ein, ein, ein, a a a and nd nd nd Ben y y y you ou ou ou ef ma ma ma ma itsy y y y c c c cite ite ite ite or or or or q q q quote uote uote uote s s s small mall mall mall p p p por or or ortions tions tions tions of of of of the the the the r r r rep ep ep epor or or ort pr t pr t pr t provide ovide ovide ovided d d d tha tha tha that y t y t y t you ou ou ou d d d do o o o s s s so o o o v v v ver er er erb b b ba a a atim tim tim tim allocation consistently increased after ? that Older Americans and De will address findings on bt ( emerg Zahra enc Ebr y savin ahimi)gs. ? Percentage of simulated household life-paths that do not run short of money in retirement. In other Associate, EBRI Upon ter emplo minatyment in ion, participa recent nts y in ears Scenario and and and and w w w with ith ith ith pr pr pr proper oper oper oper c c c citat itat itat itation ion ion ion. . . . A A A An n n ny y y y use use use use be be be bey y y yond ond ond ond the the the the sc sc sc scope of ope of ope of ope of the the the the f f f foreg oreg oreg oregoin oin oin oing req g req g req g requires E uires E uires E uires EBRI’ BRI’ BRI BRI’’s s s s pr pr pr prior e ior e ior e ior expr xpr xpr xpress ess ess ess per per per perm m m miss iss iss ission ion ion ion. . . . F F F For or or or per per per perm m m miss iss iss ission ion ion ions s s s, , , , plea p p pleas leas leas se c e e e c c contac ontac ontac ontact t t t EBRI EBRI EBRI EBRI at at at at per per per perm m m miss iss iss ission ion ion ions@e s@e s@e s@ebr br br bri.org i.org i.org i.org.... will address findings of the SECURE Act Issue Brief. more satisfied with the ease of selecting a the rollover. words, the RRR is a measure of “retirement success.” Assistance via Outside Vendors or Consultants 1 would have the account from their former ? There has been a shift away from lower-wage work Health and Retirement Study, public use dataset. Produced and distributed by the University of Michigan with funding from the National Institute on Aging (grant number NIA plan, and the number of choices available employer automatically combined with ?Changes in the Traditional Path to Full-Time Retirement (Zahra Ebrahimi) ? Present value of simulated retirement deficits at retirement age. The RSS, in this way, measures U01AG009740). Ann Arbor, MI (2014, 2015). 0% 10% 20% 30% 40% ? ? An Ho d, th w ere Do ha Olde s been a r shi Amer ft toward icans larger fir Spe msnd Their Assets? (Zahra Ebrahimi) their account in the new employer’s plan. retirement savings shortfalls. * Percentages may not add to 100 due to rounding. * Least represents the 25th percentile, which is the maximum value of the families with the lowest 25 percent of available emergency savings. Health and Retirement Study, public use dataset. Produced and distributed by the University of Michigan with funding from the National Institute on Aging (grant number NIA ** Entertainment: Sum of trips and vacations, tickets to movies and sporting or performing arts events; hobbies and leisure equipment (photography, reading, camping, etc.); U ** * * 01 Other L iquid Mos AG t : 009740 rep sa Ass vin res ets gs ents that ). include Athe nn do A 75 not rb chec th or fit , per kin MI into g ac c(entil 2014 the coun eother , , w 2015 tshic , sa c h ateg vin is ). the gsories ac mini coun , m suc um tsh , as m value one rea y of l m est ar the ate ket fa , funds fix milies ed and , w call ith v ac the ar ciab oun high le ts, est annu and 25 ities pr per epa , c etc ent id . ac ofc oun availab ts. le emergency savings. dining out in restaurants, cafes, and diners; and take-out food. Source: Paul Fronstin and M. Christopher Roebuck. “Do Accumulating HSA Balances Affect Use of Health Care Services and Spending?” Source: Lori Lucas and Jack VanDerhei, “2019 Employer Approaches to Financial Wellbeing Solutions,” EBRI Issue Brief, no. 491 Sour Sour Source: ce: ce: P P Pa a aul ul ul F F Fr r ro o onsti nsti nstin n n, a a “nd M. Christ nd M. Christ More Worke o ors p phe he Elir r gR R ib o ole e eb b fuc uc or k, k, He “ “P Pa e elrsi rsi th sten sten Covc ce y yr in in agHi Hi e De g gh h- -sp C Co o ite st st La H He eca a k llth th of G C Ca arre re owth C Clla ain iims: ms: Empl ‘I ‘Itt’’o s s y Where Whe er Offe re the the r R a S Ste p pe e sndi ,nd ” EBR ing ng I IIs sIss ,, S Sue tup tup Biiri d def ,,’’” ” , EBR EBR no. I I Source: Employee Benefit Research Institute and Greenwald & Associates, “The 2019 EBRI/Greenwald & Associates Consumer Engagement EBRI Issue Brief, no. 482 (Employee© EMPL © EMPL © EMPL © EMPL BenefiO O O O t Y Y Y Y REE EE EE EE ese B B B BEN EN EN EN arc EFIT EFIT EFIT EFIT h Insti R R R RESEAR ESEAR ESEAR ESEAR tute C C C C,H H H H Ma I I I I C C C C C C C C C C C C C C CN N N N OP OP OP OP OP OP OP OP OP OP OP OP OP OP OP STITU STITU STITU STITU yY Y Y Y Y Y Y Y Y Y Y Y Y Y Y 23 R R R R R R R R R R R R R R RI I I I I I I I I I I I I I IG G G G G G G G G G G G G G G TE TE TE TE , H H H H H H H H H H H H H H H2019 T T T T T T T T T T T T T T T 2 2 2 2020 0 0 0 2 2 2 2 2 2 2 2020 2020 2020 2020 2020 2020 2020 2020 2 2 2 0 0 0 0 0 0 00 0 0 2 2 2 2 2 2 20 0 0 0 0 0 0). 16 10 15 8 17 22 3 13 4 21 20 19 12 6 2 9 (Employee Benefit Research Institute, September 26, 2019). Iss Iss 48ue ue 7 (Emp B Bri rief efl,,o no no ye.. e4 493 B 9e 3nefi (Emp (Emp t Rlle o ose y ye ea e er c B Bh e enefi nefi Instit t tute R Re e,se se July a ar rc c h h 25 IInsti nsti , 20 tute tute 19 ,, ). Octo Octob be er r 2 24 4,, 20 2019 19). ). in Health Care Survey” (Employee Benefit Research Institute, December 19, 2019).

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