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Aging Securely: Financial and Health Care Retirement Challenges

In 1950, life expectancy in the United States was 65.6 years for men and 71.1 years for women. By 2013, life expectancy had increased dramatically to 76.6 years for men and 81.3 for women.[1] This improved longevity, combined with significant changes in how most Americans are able to save for retirement, has created new challenges for retirees and for the financial systems, both public and privately sponsored, upon which they rely for their retirement income and health security. These challenges give rise to some formidable public policy concerns, including the sustainability of programs such as Social Security and Medicare, the availability of practical private market solutions that are accessible to average American families to maintain their retirement income through their lifetimes, the affordability of health care, and the financing of long-term care needs.

Aging in America presents some unique and multifaceted risks that require a fuller examination of their impact on the affected population if we as a nation are to address and mitigate them. Fundamental to an actuarial perspective on aging is “longevity risk,” which has many dimensions and includes the increasing life expectancies of retirees and their spouses, and conceptions and misconceptions of life expectancy and its implications. Longevity risk also includes the risks of declining health, loss of ability to manage finances, and loss of independent living. That’s why the American Academy of Actuaries is hosting Aging Securely: An Actuarial Forum on Financial and Health Care Retirement Challenges on Capitol Hill today.

Our forum will provide actuarial analysis of sustainable financial programs and public policy solutions to impediments to lifetime income and financing of long-term care services and supports. This forum is part of the American Academy of Actuaries’ Aging Initiative, through which we hope to provide a fuller understanding of the actuarial implications of aging in these programs and systems to policymakers in their consideration of laws and regulations governing them, and to members of the general public as they make individual decisions guided by enhanced financial literacy. 

Actuarial experts at today’s forum will address the current financial condition of Social Security and Medicare, and approaches Congress could take to address solvency concerns. An interesting feature of the forum will be a demonstration of the Academy’s online “Social Security Game” that is being launched today, in which we invite policymakers and their constituents to learn about Social Security’s financial challenges and options for making the program solvent over a 75-year time horizon.

In addition, families whose loved ones may develop long-term care needs could face difficulty in financing needed care through either private market or publicly supported means. Estimates are that 69 percent of people who turned 65 in 2014 will use long-term care services in their lifetimes, and the average user will need care for approximately three years.[2] Addressing these needs poses a challenge as LTC insurance costs are seen as too high for many, and due to limits on access to and on eligibility for LTC insurance. Income and asset requirements limit Medicaid coverage of LTC services and supports, and Medicare provides only very limited coverage.

We hope you join us today from noon to 3:00 p.m. EDT in CVC-217 for an actuarial forum on these issues. We look forward to continuing to provide Congress with the information it needs on public policy issues related to aging. Together, we can help ensure that our approach as a nation to the challenges we face is well-informed.


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