Lack of awareness and planning could put your savings at risk

Medical and drug expenses threaten to shatter the retirement nest egg ? scrambling even the best-laid financial plans ? according to a new nationwide survey of retirees, many of whom concede that their under-estimation of the impact of escalating health care costs has significantly compromised their "golden years" lifestyle.

One in three retirees claim that they are spending far more on their health care and prescription drugs than they expected, and 55 percent of retirees admit completely overlooking their health care and prescription drug needs when they were planning for retirement expenses, according to new research released today by Medco Health Solutions, Inc.

Not only did a sizeable proportion of retirees fail to properly plan for health care and prescription drug costs, but nearly half of all retirees (49 percent) indicate they never assess the impact health care costs are having on their retirement savings or lifestyle.

The research was culled from "America's Unhealthy Nest Egg," a national survey of 1,000 Americans over age 65 conducted for Medco by Directive Analytics.

"Retirees have planned for food, shelter, taxes and entertainment, but too many neglect drug and medical costs ? which are rising far faster than the inflation rate ? are jeopardizing the quality of life they expect to enjoy during retirement," said Sally Greenberg, Executive Director, National Consumers League. "The fact that many seniors have not planned for increased health expenses, and the fact that many aren't aware of ways they may be able to save on their medications, shows a real need for education about how to build a healthy nest egg."

The Medco research revealed that for one in four middle-income retirees, $1 out of every $10 of their monthly retirement income goes to pay for medications alone. Furthermore, fewer than half of retirees (48 percent) indicate that they use all of the tools at their disposal to save money on their medications; and approximately one in four (24 percent) claim to use very few to no cost savings tools available to cut their medication expenses.

"It's a notable contradiction that retirees are facing high drug costs, yet either are not aware of, or choose not to use, the tools they have available to save," said Donna DeNardo, senior vice president, Retiree Solutions, Medco. "Now, more than ever, retirees are nervous about outliving their ability to afford the escalating costs of living well."

In addition to the impact of monthly drug expenses, the survey also revealed a surprising lack of awareness among retirees of specific cost-savings tools:

* Discussions with doctors lacking: Nearly half of retirees stated they infrequently or never discuss with their doctors ways to save money on their medications; previous research has shown that doctors are likely to prescribe generic drugs when asked by patients.

* Savings left out in the cold: Three out of four retirees (76 percent) indicated they were aware of the cost savings benefits of getting their drugs from a mail order pharmacy, but only 40 percent actually use the tool to save money on their medications.

* Few know about dose optimization: A miniscule 13 percent of retirees indicated they were aware they could take fewer pills or capsules at a higher dose to reduce the number of pills or capsules they would have to buy ? an approach known as dose optimization.

* Women, Northeasterners spending more than anticipated: The impact of health care and prescription drug costs on retirement savings is far more acute in the Northeast, where 45 percent of seniors are spending more than they anticipated, compared to only 27 percent of retirees in the western part of the nation. Retired women are 52 percent more likely than men to indicate they are spending more than they anticipated.

* Mixed bag on Medicare: According to the survey, 40 percent of seniors who have reviewed Medicare plans indicated that their primary factor for choosing a plan is premium price, while only 15 percent consider the range of drugs offered. Despite the attention devoted to discussion around the coverage gap in Medicare, only 7 percent of seniors indicated that such a benefit would be a deciding factor in their plan choice.

Medco Health Solutions, Inc., (NYSE:MHS) is the nation's leading pharmacy benefit manager based on its 2006 total net revenues of more than $42 billion. Medco has developed a free consumer's guide called "Prescription for a Healthy Nest Egg: Half a Dozen Ways to Lower Your Drug Costs and Stretch Your Retirement Dollar." The free guide presents easy-to-understand information on savings tools that are largely unknown or underutilized by retirees including generic alternatives; optimizing dosages; and eliminating overlapping medications from different doctors. The Guide is available free to consumers in a downloadable version at http://www.medicaredadvisor.com, or by sending a postcard requesting the Guide to "Prescription for a Healthy Nest Egg", PO Box 8007 Parsippany, NJ 07054-8007.