Health Care Costs, Taxes, and the Retirement Decision

Brief

Health Care Costs, Taxes, and the Retirement Decision

Conceptual Issues and Illustrative Simulations

Abstract

Will soaring health costs and high future tax rates lead people to delay retirement? This study assesses potential impacts by comparing retirement incomes under two different scenarios. The high-burden scenario assumes that health costs grow rapidly and tax rates rise nearly enough to balance the federal budget. The alternative assumes that burdens remain at their 2000 levels. Moderate-income couples retiring in 2030 would have to work an additional 2.5 years under the high-burden scenario to receive the same income in the first year of retirement, net of taxes and out-of-pocket health spending, as they would receive under the low-burden scenario.

Research Area: 

Cross-Center Initiative

Cross-Center Initiative: 
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