The Impact of Healthy Behavior on Future Health Status, Spending, and Retirement

Federico Girosi, RAND
Dana Goldman, RAND
Yuhui Zheng, RAND
Michael Hurd, RAND

Chronic illness imposes a substantial burden on the elderly. This burden will likely intensify given alarming increases in obesity and diabetes among the young, and rising disability rates among younger demographic groups. So not only will the number of elderly 65 years of age or older double in the next 25 years, the constellation of disease and disability facing them could be much greater. We forecast how these trends will affect health status, health spending and retirement for Americans aged 55 or older using the Health and Retirement Survey and microsimulation techniques. We consider different scenarios for improvement in health status over time. Healthier individuals may delay their retirement, reducing the burden on Social Security, but may also live longer, increasing the fiscal burden. We quantify this trade-off and describe how this framework can be used to analyze a wide range of policy options.