Health and Retirement Study

• According to T. Rowe Price's analysis, for households with less than $150,000 in annual income, spending volatility is largely driven by nondiscretionary expenses[1].
• Specifically, the paper finds that among them, home-related expenses are the largest contributor to spending volatility during retirement, and they are five times more likely to drive spending volatility than health-related expenses.
• Home-related expenses accounted for 25.1% of the variance in spending, while health-care expenses accounted for 5.3%.
• [3]
  For retirees with annual incomes levels above $150,000, spending volatility was largely due to changes in discretionary spending.

The Research Brief is a short take about interesting academic work.

The big idea

• Based on a study we conducted, we determined that if strict eligibility rules for Medicaid were changed to help cover such people, from 700,000 to 11.5 million people over 65 would be newly eligible for the program.
• Depending on which rules were changed, we would expect to see one of the following scenarios:


Unless the government adopted the Elder Index approach, most of the additional enrollees in these scenarios would have poor health and few financial assets.

Why it matters

• Low-income adults who are excluded from Medicaid under existing criteria also face high health care costs that contribute to their financial insecurity.
• Researchers found that 1 in 5 Americans over 65 skipped, delayed or used less medical care or drugs because of financial constraints.
• Increasing the number of low-income older people with both Medicaid and Medicare coverage would reduce their out-of-pocket health spending.

What still isn’t known

• Increasing the number of older people with Medicaid coverage would require more government funding, although the degree of extra spending would depend on which rules the government would change.
• Accurately estimating these costs and the potential benefits for families and communities that would come from these changes would require additional research.

• The Saver's Credit , also referred to as the Retirement Savings Contributions Credit by the Internal Revenue Service (IRS), is available to millions of eligible taxpayers who are saving for retirement.
• In this context, "non-refundable" means the credit cannot exceed a person's federal income tax for the year.
• According to TCRS' analysis of the most recently published IRS data, the average amount of the Saver's Credit in 2020 was $186.
• If you prepare your tax return manually, complete Form 8880 , Credit for Qualified Retirement Savings Contributions, to determine your exact credit rate and amount.

• Working empty nesters who still have a mortgage might be interested in paying off their mortgage before they retire.
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• To give your loan officers a competitive advantage to expand their database and nurture homebuyers in the sales funnel, click here to watch the FinLocker online demo or schedule a 1:1 personal consultation .