Health as a financial asset

Retirement planning treats health as a risk to be insured. It is also an asset that can be maintained, and the financial return on doing so is substantial.

The mechanism

The largest retirement costs associated with health are not medical treatment. They are the costs that follow from losing functional independence.

Paid care, home modification, or a move to residential accommodation are the expensive outcomes, and they are triggered by an inability to manage daily activities.

Which means anything that defers that transition has a direct financial value, calculable from the cost of the care avoided.

Deferring a move to assisted living by three years is worth a substantial sum, and the interventions that make it more likely cost very little by comparison.

What the evidence supports

Physical activity, which has the strongest evidence base of anything available.

Associations with reduced mortality, reduced cardiovascular disease, better cognitive outcomes, reduced falls and maintained functional independence are consistent across a large literature.

Guidelines generally recommend a weekly amount of moderate activity plus strength training at least twice weekly.

Strength training in particular is under-emphasised. Muscle mass declines with age, and that decline is closely tied to the loss of functional capacity — the ability to rise from a chair, climb stairs and recover from a stumble.

It responds to resistance training at any age, including in people in their eighties and nineties.

Balance work, which reduces falls specifically, as discussed elsewhere on this site.

Not smoking, where the benefits of stopping are meaningful even in later life.

Sleep, where chronic insufficiency is associated with a range of poor outcomes.

Social connection, where the observational evidence links isolation to worse health and higher mortality, with effect sizes comparable to some conventional risk factors.

Preventive care and screening, which is generally covered under Medicare without cost sharing and is under-used.

The honest limits

Necessary, because this material is easily overstated.

Much of the evidence is observational, and healthier people exercise more as well as exercising making people healthier.

Effect sizes for individuals are uncertain, and none of this prevents illness. Plenty of people who do everything recommended still develop serious conditions.

And there is a genuine risk of implying that poor health in later life reflects personal failure, which is both untrue and unkind. Genetics, circumstances, occupation and luck all play substantial parts.

The argument here is probabilistic: these actions improve the odds, and the improvement has a financial value alongside everything else.

The spending case

Which is the practical implication.

A gym membership, a personal trainer for a period to learn safe technique, better food, and time devoted to activity all cost money in a retirement budget.

Set against the cost of care, they are inexpensive, and they should be treated as a planned expenditure rather than a discretionary one.

The same applies to preventive dental care, hearing aids and vision correction, all of which have downstream consequences if neglected.

The time argument

Retirement supplies the resource that made this difficult during working life.

The most commonly cited barrier to physical activity is time, and it largely disappears.

Which makes the retirement transition an unusually good moment to establish habits, and there is evidence that major life transitions are effective points for behaviour change generally.

The framing

Consider health spending as an investment with a return measured in years of independence.

Most retirees will spend considerable effort optimising a portfolio for a fraction of a per cent of additional return.

The same effort applied to maintaining physical function has a larger expected effect on both the cost of the retirement and the quality of it.

Where to start

For anyone not currently active, the evidence is encouraging about modest beginnings.

Studies examining activity levels generally find the largest health gains occur when moving from very little activity to some, rather than from moderate to high.

Which means walking most days, and two short strength sessions weekly, captures a substantial share of the available benefit.

Supervised instruction for the first several sessions of any resistance training is worth paying for, both for safety and because technique determines whether it works.

And a discussion with a clinician before starting is appropriate for anyone with existing cardiovascular, joint or metabolic conditions.

General information only, not medical advice. Consult a qualified clinician before starting a new exercise programme, particularly if you have existing conditions.