Industry News

On February 3, 2026, the Center for Retirement Research (CRR) at Boston College published its issue brief, How Much Does Health Spending Eat Away at Retirees’ Income? CRR studied the impact of out-of-pocket (OOP) health spending on the income of retirees. As a basis to calculate the portion of Social Security benefits and total available income for non-medical spending, it uses the 2018-2022 information from the Health and Retirement Study (HRS). In addition, it explores how this ratio varies by age, health status, income and supplemental insurance coverage (Medicare Advantage, Medicaid and retiree health insurance).

The key findings include: 

• An essential measurement of retirement well-being is the OOP health spending relative to income.
• Typically, retirees may incur significant costs for premiums, copays and uncovered services even with Medicare coverage.
• After deducting these costs, the remaining amount for the median retiree is 71% of Social Security and 88% of total income.
• The purchasing power of retirees is greatly impacted by their income net of OOP medical costs, which are generally considered nondiscretionary.

The report concludes, “With OOP health expenditures already eating away at retirement income, and the uncertainty from further health policy changes and Social Security drawing ever closer to trust fund depletion, it is understandable why many retirees feel that making ends meet is difficult.” 

The report is available here.