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Press Release

Willis Towers Watson research paper offers crucial guidance on financing health care in retirement

Paper outlines steps for determining health care costs in retirement, role of health savings accounts

March 2, 2021

Retirement|Benefits Administration and Outsourcing Solutions

ARLINGTON, VA, March 2, 2021 — Willis Towers Watson (NASDAQ: WLTW), a leading global advisory, broking and solutions company, has released “Financing Health Care in Retirement,” a new research paper that offers employers guidance on the importance and role of health savings accounts (HSAs), e.g., how they work and how employers can help employees take full advantage of their potential. The paper addresses key issues such as determining health care costs, understanding different retirement health care options and creating an appropriate savings plan to pay for health care in retirement.

The paper notes the cost of health care in retirement is staggering, ranging from $140,000 to $190,000 over a retiree’s lifetime. While employers are presently concerned with helping employees meet their immediate financial needs during the pandemic, workers are also looking for assistance from their employers for retirement saving support. In fact, Willis Towers Watson’s 2020 Global Benefits Attitudes Survey found that 53% of employees listed “saving for retirement” as the number one area they want help with from their employer.

“Employers play an essential role in their employees’ financial wellbeing, and that includes helping them plan for the cost of health care in retirement,” said David Speier, managing director, Benefits Accounts, Willis Towers Watson. “Health care is most retirees’ largest expense, and with more of the cost shifting to employees, employers are striving to help them make informed decisions about their options and create an appropriate savings plan.”

Many individuals assume Medicare covers all health care costs in retirement, but out-of-pocket costs can be significant. It is important that employees understand the different retirement health care options and cost considerations, as well as the value a tax-efficient HSA offers. HSAs are the only funding vehicle where savings and investment returns are never taxed if used to purchase eligible health care expenses.

The research paper explains:

  • The health care cost that Medicare-eligible retirees must pay through premiums and point-of-care cost sharing
  • The different ways Medicare-eligible retirees can access coverage
  • The tax efficiency of an HSA
  • The ability for an HSA to help pay for the cost of health care in retirement

The paper also explores how best to leverage an HSA, including the importance of getting employees to participate in a health plan that allows the employee to use an HSA, and the value of an HSA when compared with a 401(k).

“Health care spending and retirement savings is an ongoing and long-term challenge that an HSA can help address as a part of a broader retirement savings plan,” said Speier. “It’s particularly important for employees today to reassess their financial wellness plan and become familiar with HSAs as a tax-efficient way of saving specifically for health care in retirement.”

About Willis Towers Watson

Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving more than 140 countries and markets. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential.

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