Another Benefit of Health: Wealth

Wednesday, 25 November 2009, 20:37 • 2174 เข้าชมแล้ว
Another Benefit of Health: Wealth
By Dan Kadlec Thursday, Sep. 11, 2008
Investing the money you would have spent on cigarettes from age 40 to 65 may net $100,000, not counting what you save by avoiding disease.


Most people save for retirement by focusing on their wealth. But you may accomplish more by focusing on your health. That's because the out-of-pocket costs for diseases that may be avoidable through diet and exercise can be staggering. Getting and staying fit now may be worth tens or even hundreds of thousands of dollars later--a sum that just might exceed the carefully crafted stockpile in your 401(k).

That's not to say that if you are fit you don't need a financial plan. "Good health has a high value in dollars," says Bruce Pyenson, an actuary at health consultants Milliman. "But it's not enough for you to stop saving." He says your savings goal, if you are healthy, should be 10 times your final salary, and significantly more if you suffer a chronic health problem such as cardiovascular disease or diabetes.

How much savings is enough for chronic sufferers? That depends on the severity of the ailment and the level of coverage. But consider that Medicare spends four times as much on unhealthy people as it does on healthy ones; out-of-pocket costs from deductibles and co-pays are much higher too. If you have an uncovered, extended nursing-home stay, the cost of health care in retirement may surpass $300,000.

Such costs have given rise to a wellness industry that promotes healthy living now as a means of avoiding disease and expense later. The industry, which has exploded to $2 billion in annual revenue from less than $100 million a decade ago, promotes smoking-cessation and stress-reduction programs, as well as healthy-diet and daily-exercise regimens such as stretching and moderate weight training. Even a cursory estimate shows how quickly a few health measures pay off.

Lose weight. Obesity is linked to diabetes, cardiovascular disease, cancer and more. Obese people spend a third more than fit people on health services and three-quarters more on medications, according to Rand Health. The average annual out-of-pocket cost for diabetics is $454, according to an analysis of government data conducted by Nationwide Better Health, a health-management company. But those costs skyrocket to $12,000 or more for the 1 in 2 diabetics who do not carefully tend to their illness, says Nationwide. Bottom line: shed some pounds, avoid these diseases and invest the related windfall from, say, age 40 to 65--and you could pad your nest egg by up to $700,000.

Stop smoking. Not buying cigarettes alone can add up to more than $100,000 if you stop at age 40 and invest the difference conservatively until age 65. If you avoid emphysema and cancer, your savings multiply. The potential savings from medical treatments could add tens of thousands of dollars more to your nest egg.

Get moving. Exercise and diet are keys to avoiding high blood pressure and heart disease, which together have annual costs to the individual of $606, according to Nationwide's analysis. Investing that sum for 25 years may provide more than $35,000.

Such savings are not guaranteed. Even healthy people get sick, and living healthily usually means living longer, which layers on costs for other health woes you may encounter as you age. Still, the most important steps to retirement security may have more to do with what you give up (fatty foods, cigarettes and more than two alcoholic drinks a day) than with what you sock away. This is one situation in which less means much more.
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