Life Quality and Health Costs in Late Retirement
By Yuanshan Cheng (Winthrop University), Philip Gibson (Winthrop University), Tao Guo (William Paterson University)
Individuals are living longer due to the advancement of medical technology and nutrition quality. Are the elderly enjoying retirement in those extended years with good quality of life, or, are they simply alive? Using data from the Health and Retirement Study (HRS) and the Consumption and Activities Mail Survey (CAMS), this study contributes to the literature by presenting empirical evidence on how individuals spend time in retirement. The results show that retirees on average do not spend their time significantly different throughout retirement. Most life tasks such as reading the paper or magazines, listening to music, playing sports or exercising, visiting others, and house cleaning are similar among retirees in different age groups. We also present evidence that retirees on average experience a spike in medical expenses late in retirement. We compare systematic withdrawal strategies with and without health costs risk quantifying the impact on portfolio sustainability.