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Hi, Close to ER - need to estimate medical expenses
Old 12-05-2014, 08:05 PM   #1
Confused about dryer sheets
 
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Hi, Close to ER - need to estimate medical expenses

Hello,

I am considering retiring next year and would appreciate any comments on estimating medical expenses. I'm using both Fidelity RIP and Firecalc to get multiple calculations.

My situation:
My age: 57
Spouse's age: 58
Location: west Texas

Assumptions:
  • Now until age 65:
    • $18,000 all-in medical expenses per year (insurance, deductibles, co-pay, etc).
    • Assume using federal exchange but won't receive subsidy as I'll be selling off highly appreciated stock every year for expenses. HDHP
    • Average health right now but spouse does have history of breast cancer, hopefully cured
  • Age 65 until 85
    • $8,000 all-in medical expenses per year (Medicare + supplemental insurance + deductibles + co-pays)
  • Age 85 until death
    • Increase by $2,000 per year every year above age 65 level.


I welcome any suggestions both on the specific numbers as well as different ways to look at it.


Thanks!
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Old 12-06-2014, 06:17 AM   #2
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do those budget figures include dental? Are you covering any kids? thanks


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Old 12-06-2014, 08:04 AM   #3
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Welcome and congratulations on being on the precipice of ER!!

The $18k a year ER number is a lot higher than what it costs us (unless we maxed out the deductible every year which we don't come close to doing). Since you seem to be pretty through, I assume that the health insurance piece is based on healthsherpa.com or healthcare.gov or a carrier's website? And deductibles and co-pays are based on recent experience, perhaps with some provision for adverse deviation?

FWIW, our health insurance for two is about $6k a year for a bare-bones catastrophic HDHI plan with a $12k+ deductible but it gives us access to BCBS negotiated rates with healthcare providers and financial protection from a serious illness. While our deductibles and copays are negligible so far this year, I budget about $3k a year for those, so ~$9k in total.

I'm familiar with my grandmother, great-aunt and Mom's costs while on Medicare and $8k a year seems about right. Part A is $110/month, Part D ~$40 and ~$200/month for Medigap coverage as I recall so that would be a bit over $8k for a couple. Deductibles and copays would be negligible since Medigap would cover those.

We have found dental insurance not to be worth the cost so we just pay for an annual checkup and two cleanings a year each.

All amounts are current $.
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Old 12-06-2014, 11:02 AM   #4
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Health care cost was the biggest surprise for me after I retired. Premiums have almost doubled since I retired almost 3 years ago for the same levels of coverage. (Not on Medicare yet) Plus, more doctor visits, higher copays, higher drug cost. It all adds up.
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Old 12-06-2014, 03:15 PM   #5
Confused about dryer sheets
 
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Thank you for your replies.

I do have one child we'll be paying for coverage for the next three years. I used the Kaiser site for the premium estimate and their statement that the premium typically covers 70% of the cost to reach the medical total. Then added a bit for out of pocket vision dental.

I appreciate the reply regarding costs while on Medicare and will update based on that as well as some numbers listed on the AARP site.

Based on your replies I'll spend some more quality time with a spreadsheet. It is difficult to consider drawing down rather than adding to savings so I am purposefully being very conservative in my assumptions.

Thanks again. Hopefully the spreadsheet (and RIP and Firecalc) will all give the same conclusion.
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Old 12-06-2014, 03:27 PM   #6
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Quote:
Originally Posted by Plutarch View Post
  • Now until age 65:
    • $18,000 all-in medical expenses per year (insurance, deductibles, co-pay, etc).
    • Assume using federal exchange but won't receive subsidy as I'll be selling off highly appreciated stock every year for expenses. HDHP
    • Average health right now but spouse does have history of breast cancer, hopefully cured
  • Age 65 until 85
    • $8,000 all-in medical expenses per year (Medicare + supplemental insurance + deductibles + co-pays)
  • Age 85 until death
    • Increase by $2,000 per year every year above age 65 level.
Hello Plutarch, welcome to the forum. Please feel free to stop by here and tell us a little about yourself. (note to self - read the whole post before replying)

I think the $18K per year during the pre-65 period may be a little light, unless you choose a low cost insurance policy. At age 60, many full network policies are costing $800 per person even with high deductibles.

Missing from your projection are two items many here would consider critical. One is the cost of long term care, the other large non-reimbursable expenses, mainly insurance cost share portion and dental. There is no one way to approach the budget projection here, in my case we have separate funds set aside to cover these expenses.
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Old 12-06-2014, 05:39 PM   #7
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Quote:
Originally Posted by Plutarch View Post
... It is difficult to consider drawing down rather than adding to savings ....
This is very common and there are some thread out there on it. Don't worry, you'll get used to it soon enough. Change is hard.

I found it easier to just pre-program mine - I have a monthly transfer from an online savings account that is the most liquid part of my retirement assets to my checking account that is my monthly "paycheck".
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