EBRI Issue Brief
The Impact of Disability on Spending in Retirement
One in three Americans ages 65 and over have at least one disability. Older Americans with disabilities and their surrounding caregivers face a myriad of physical, financial, and mental health challenges directly and indirectly related to disability status. This Issue Brief examines the prevalence of disability among older adults and the impact of being affected by disability on various aspects of retirement, from preparedness to debt levels and monthly spending.
Some of the key findings include:
- More than half (61 percent) of disability-affected retirees said they saved less than was needed for retirement, as compared with 41 percent of non-disability-affected retirees.
- Disability-affected retirees were more likely to say they retired earlier than expected (74 percent) vs. non-disability-affected retirees (49 percent).
- Disability-affected retirees were more likely to start off retirement with fewer assets and subsequently have lower median and average values of household financial assets than non-disability-affected retirees. Non-disability-affected retirees have 2.3 times the average current assets of disability-affected retirees.
- Disability-affected retirees were less likely to report that they have an “easily manageable level of debt” and more likely to report having debt outstanding across all types of debt as compared with non-disability-affected retirees. Credit card and medical debt stood out as the largest differences with respect to debt prevalence.
- Fifty-seven percent of disability-affected retirees spend less than $2,000 each month as compared with 45 percent of non-disability-affected retirees. Disability-affected retirees reported spending more on housing and out-of-pocket medical costs and less on entertainment and other expenses compared with non-disability-affected retirees.
- Disability-affected retirees were more likely (36 percent) to feel their current spending level is higher than they can afford as compared with non-disability-affected retirees (24 percent).
- Disability-affected retirees were more likely to report difficulty with budgeting decisions as compared with non-disability-affected retirees. On average, 1 in 6 disability-affected retirees reported difficulty making budgeting decisions compared with 1 in 10 non-disability-affected retirees.
- Disability was also correlated with lower levels of well-being across the measures of alignment, satisfaction, and standard of living. In addition, disability-affected retirees were three times more likely to be seeking treatment for depression/anxiety (27 percent) than non-disability-affected retirees (9 percent).
All of these statistics together show that disability has a strong impact on individuals’ abilities to manage their finances and cover expenses while also taking a toll on their overall well-being. Employers and benefits providers can improve outcomes and quality of life in retirement for those affected by disability by being inclusive in programs and communications.