The Finance of Longevity

Wealth, Health & The Priority of Saving

Importance of Health as a Driver of Retirement Savings

White paper shows how savings from managing chronic conditions can motivate improved employee health and retirement savings as well as lead to lower costs for employers

DANVERS, Mass., July 10, 2018 /PRNewswire/ — Encouraging working Americans to save more for retirement is a priority for governmental health agencies, employers, 401(k) plan administrators, and financial advisors. Despite attempts to motivate individuals to increase savings, contributions to 401(k) plans as a percentage of income have barely moved over the last two decades, underscoring the need for new approaches to encourage Americans to save more for retirement.

A new white paper, “Health & Retirement Savings: Leveraging Health Care Costs to Drive 401(k) Contributions & Improve Health” from HealthyCapital, a joint venture between Mercy and HealthView Services, provides insights into ways in which healthcare costs can be used as a powerful driver of improvements in employee wellness and retirement savings.

An innovator in the fintech and healthtech sectors, HealthyCapital provides planning tools that leverage healthcare cost data from 70 million actual medical cases to calculate out-of-pocket healthcare costs by health condition, the savings from the management of chronic health conditions, and the value of these savings at retirement to motivate improved health and increased 401(k) contributions. The paper outlines expenses for working Americans participating in an average group HMO plan.

Drawing upon HealthView Services’ more than a decade of experience with financial services companies that work with approximately 30 million plan participants, the paper notes that when employees are informed of the savings required to address projected healthcare needs in retirement they have increased 401(k) contributions by as much as 25%.

The Value Of Health

“The significant boost in 401(k) contributions clearly underscores the value working Americans place on covering their healthcare needs,” said Ron Mastrogiovanni, CEO of HealthyCapital and HealthView Services. “When employees are provided with personalized cost data related to something as important to them as health, they are more likely to take action than when we ask them to save more for retirement in general.”

“We can actuarially determine the savings and life expectancy benefits individuals can achieve by effectively managing their health and making small behavioral changes,” added Mastrogiovanni. “The data highlights ways in which people suffering from chronic conditions can lower their annual healthcare costs, along with the value of their savings if invested. This provides workers with a powerful incentive to contribute more toward retirement plans.”

A 50-year-old man diagnosed with high blood pressure or type 2 diabetes would save around $2,000 per year in out-of-pocket healthcare costs pre-retirement, and add three to eight years to his life expectancy by making a few behavior modifications and taking prescribed medications.

In a case study, a 45-year-old woman diagnosed with type 2 diabetes and high cholesterol could lower her annual pre-retirement out-of-pocket healthcare costs by more than $3,300 – and add eight years to her life expectancy – by better managing her conditions. If she contributes the savings to her 401(k), assuming a 6% return, her balance at retirement would be $108,000 higher.

The value of healthy choices

HealthyCapital’s new ‘Health Management Retirement Funding Index‘ puts this into context by calculating the percentage of retirement healthcare costs that can be offset by making healthier choices and investing the savings.

At age 65, our 45-year-old woman would have 45% of the savings needed to cover her total projected lifetime healthcare costs in retirement. This accounts for living to her new expected longevity of 84, compared to age 76 if she did not manage her health. These costs include Medicare Part B and D premiums, supplemental insurance (Plan F), and all other out-of-pocket costs. Long-term care is not included in these calculations.

When employees are provided with personalized cost data related to something as important to them as health, they are more likely to take action...

The Index can be applied to the management of a range of conditions. By taking steps to reduce weight or stop smoking and investing the savings, a 45-year-old woman would be able to save enough to reduce her total lifetime retirement healthcare expenses by 20% to 32%.

“The Index underscores the magnitude of savings possible through health condition management and frames them in terms of what we know is a driver of retirement savings – future health care costs,” notes Mastrogiovanni. “Since employers pay on average around three quarters of their employees’ health premiums, the financial gains for self-insured employers of improved health are a multiple of the benefits for employees. The lower expenses for employers offer opportunities to provide wellness support and financial incentives to further encourage healthier behaviors and savings.”

Applying industry wellness program participation rates where incentives are provided, the HealthyCapital white paper projects $2.5 million in potential net savings for a 5,000-employee company. This assumes 50% of employees have a chronic condition and 50% of those participants take steps to manage their health conditions, based on an average pre-retirement employee saving rate of $1,600, and an average program cost of $45 per employee.



HealthyCapital (, a joint venture between HealthView Services and Mercy, draws upon 70 million healthcare cases, and actuarial, government, and economic data to project an individual’s out-of-pocket cost savings from lifestyle changes and condition management. The company’s data and tools incentivize individuals to adopt healthy behaviors to increase life expectancy, reduce personal and employer healthcare costs, and generate additional retirement income.

Mercy (, named one of the top five large U.S. health systems in 2018, 2017 and 2016 by IBM Watson Health, serves millions annually. Mercy includes more than 40 acute care and specialty (heart, children’s, orthopedic and rehab) hospitals, 800 physician practices and outpatient facilities, 44,000 co-workers and 2,100 Mercy Clinic physicians in Arkansas, Kansas, Missouri and Oklahoma. Mercy also has clinics, outpatient services and outreach ministries in Arkansas, Louisiana, Mississippi and Texas. In addition, Mercy’s IT division, Mercy Technology Services, supply chain organization, ROi, and Mercy Virtual commercially serve providers and patients in more than 20 states coast to coast.

HealthView Services
HealthView Services ( is the leading provider of retirement healthcare cost data, Social Security optimization, and long-term care retirement planning tools for the financial services industry and financial advisors. HealthWealthLink, the company’s signature service, is an integrated retirement planning tool that assists financial advisors in preparing personalized estimates of retirement healthcare costs and associated strategies designed to achieve clients’ retirement goals.