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Lifetime Medical Spending of Retirees

Author

Listed:
  • John Bailey Jones
  • Aaron Steelman

Abstract

Retirees face considerable medical expenses during their remaining lives. Model simulations suggest that although a large amount of that spending can be predicted ? based on attributes such as income, health, and marital status ? there remains significant dispersion. Households with heads who turned seventy in 1992 will incur $122,000 in medical spending on average, including out-of-pocket expenditures and Medicaid payments. But the top 5 percent of households will incur more than $300,000 in such spending. The level and dispersion of this spending diminish only slowly with age.

Suggested Citation

  • John Bailey Jones & Aaron Steelman, 2019. "Lifetime Medical Spending of Retirees," Richmond Fed Economic Brief, Federal Reserve Bank of Richmond, issue May.
    • Handle: RePEc:fip:fedreb:00076
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    File URL: https://www.richmondfed.org/publications/research/economic_brief/2019/eb_19-05
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    Citations

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    1. is not listed on IDEAS
    2. John Bailey Jones & Aaron Steelman, 2019. "Lifetime Medical Spending of Retirees," Richmond Fed Economic Brief, Federal Reserve Bank of Richmond, issue May.
    3. Pablo Garcia Sanchez & Luca Marchiori & Olivier Pierrard, 2025. "Long-term care expenditures and investment decisions under uncertainty," Journal of Population Economics, Springer;European Society for Population Economics, vol. 38(1), pages 1-23, March.
    4. Pablo Garcia-Sanchez & Olivier Pierrard, 2023. "Uncertain Lifetime, Health Investment And Welfare," LIDAM Discussion Papers IRES 2023020, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    5. Olafsson, Arna & Pagel, Michaela, 2024. "Retirement puzzles: New evidence from personal finances," Journal of Public Economics, Elsevier, vol. 234(C).
    6. Mariacristina De Nardi & Eric French & John Bailey Jones & Rory McGee, 2021. "Why Do Couples and Singles Save During Retirement?," Richmond Fed Economic Brief, Federal Reserve Bank of Richmond, vol. 21(09), pages 1-65, May.
    7. Wouterse, B.; & Hussem, A.; & Wong, A.;, 2018. "The effect of co-payments in Long Term Care on the distribution of payments,consumption, and risk," Health, Econometrics and Data Group (HEDG) Working Papers 18/24, HEDG, c/o Department of Economics, University of York.
    8. Bram Wouterse & Arjen Hussem & Albert Wong, 2022. "The risk protection and redistribution effects of long‐term care co‐payments," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 89(1), pages 161-186, March.
    9. Tatyana Koreshkova & Minjoon Lee, 2020. "Nursing Homes in Equilibrium: Implications for Long-term Care Policies," Working Papers wp414, University of Michigan, Michigan Retirement Research Center.
    10. Mariacristina De Nardi & Eric French & John Bailey Jones & Rory McGee & Rachel Rodgers, 2020. "Medical Spending, Bequests, and Asset Dynamics around the Time of Death," Economic Quarterly, Federal Reserve Bank of Richmond, vol. 4, pages 135-157.
    11. Emil Bandoni & Carolina Fugazza, 2025. "Health Disasters and Life Cycle Risk Taking," Carlo Alberto Notebooks 748 JEL Classification: D, Collegio Carlo Alberto.
    12. van der Vaart, J & Groneck, M & van Ooijen, R, 2024. "Health Inequalities and the Progressivity of Old-Age Social Insurance Programs," Health, Econometrics and Data Group (HEDG) Working Papers 24/20, HEDG, c/o Department of Economics, University of York.
    13. Bertrand Achou & Philippe De Donder & Franca Glenzer & Minjoon Lee & Marie-Louise Leroux, 2023. "At Home versus in a Nursing Home: Long-term Care Settings and Marginal Utility," CIRANO Working Papers 2023s-14, CIRANO.
    14. Alicia H. Munnell & Gal Wettstein & Wenliang Hou, 2022. "How best to annuitize defined contribution assets?," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 89(1), pages 211-235, March.
    15. Susann Rohwedder & Péter Hudomiet & Michael D. Hurd, 2022. "Risk of Large Medical Expenditures at Older Ages and Their Impact on Economic Well-being," Working Papers wp457, University of Michigan, Michigan Retirement Research Center.
    16. Mariacristina De Nardi & Eric French & John Bailey Jones & Rory McGee, 2025. "Why Do Couples and Singles Save during Retirement? Household Heterogeneity and Its Aggregate Implications," Journal of Political Economy, University of Chicago Press, vol. 133(3), pages 750-792.
    17. Bram Wouterse & Arjen Hussem, 2019. "The welfare effects of co-payments in long term care," CPB Discussion Paper 394, CPB Netherlands Bureau for Economic Policy Analysis.

    More about this item

    Keywords

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    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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