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$500,000 Surprise: Health Care Sticker Shock Awaits You in Retirement
06-23-2017, 09:44 AM
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#1
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Join Date: May 2013
Location: Les Bois
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$500,000 Surprise: Health Care Sticker Shock Awaits You in Retirement
https://www.bloomberg.com/news/artic...-in-retirement
"For a healthy 65-year-old couple retiring this year with a future adjusted gross annual income of less than $170,000 after adding in any tax-exempt income, projected lifetime health-care premiums add up to $321,994 in today's dollars. "
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06-23-2017, 10:07 AM
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#2
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Recycles dryer sheets
Join Date: Aug 2013
Posts: 275
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The good news is I have forecast $335K (today $) of total premiums from age 65 to 95.. The bad news is I assumed 7.5% inflation rate for healthcare cost and from the other ACA subsidy thread (shut down?) I should be using at lest 10%... I used 7.5% based on Fidelity's tool. I assumed they did their homework, but I guess not... IMHO, If people are using FireCalc as their main tool they better be using a high inflation rate (vs CPI) to account for increasing HC cost in their ER plan...
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06-23-2017, 10:14 AM
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#3
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Thinks s/he gets paid by the post
Join Date: Oct 2009
Posts: 1,190
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Yeah, but another way to look at the same exact number ($322,000) is that that works out to $1,340 per month assuming a 20 year life span (i.e. live to 85). Looks a lot less daunting, no?
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06-23-2017, 10:16 AM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2007
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Quote:
Originally Posted by LARS
Yeah, but another way to look at the same exact number ($322,000) is that that works out to $1,340 per month assuming a 20 year life span (i.e. live to 85). Looks a lot less daunting, no?
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Not Really...
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06-23-2017, 10:18 AM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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Quote:
Originally Posted by Big_Hitter
https://www.bloomberg.com/news/artic...-in-retirement
"For a healthy 65-year-old couple retiring this year with a future adjusted gross annual income of less than $170,000 after adding in any tax-exempt income, projected lifetime health-care premiums add up to $321,994 in today's dollars. "
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I'm wondering how they got this number for a couple of 65 year olds on Medicare....321,994 in premiums alone?
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06-23-2017, 10:19 AM
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#6
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Thinks s/he gets paid by the post
Join Date: Oct 2009
Posts: 1,190
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06-23-2017, 10:21 AM
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#7
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Thinks s/he gets paid by the post
Join Date: Oct 2012
Location: Colorado Mountains
Posts: 3,163
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Just my opinion: A lot of assumptions stacked up into a pessimistic view. I don't think I will change my outlook on saving, investing, or living based on this article.
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06-23-2017, 10:26 AM
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#8
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2013
Location: Les Bois
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Quote:
Originally Posted by LARS
Yeah, but another way to look at the same exact number ($322,000) is that that works out to $1,340 per month assuming a 20 year life span (i.e. live to 85). Looks a lot less daunting, no?
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you have to increase the 1340 with medical inflation
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You can't be a retirement plan actuary without a retirement plan, otherwise you lose all credibility...
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06-23-2017, 10:45 AM
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#9
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Thinks s/he gets paid by the post
Join Date: Oct 2009
Posts: 1,190
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Quote:
Originally Posted by Big_Hitter
you have to increase the 1340 with medical inflation
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Presumably the 320,000 today, which my calc assumes you have today, will increase at inflation rate to cover so it's a wash. But yeah if you can't defease the cost you need to cover inflation.
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06-23-2017, 10:52 AM
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#10
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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From the article: "A 55-year-old couple that files for Social Security benefits at their full retirement age of 67 will find 92 percent of benefit checks going to health care."
I don't see that happening, one way or another. It doesn't leave enough left over for most retirees to buy other basics like food, housing or transportation.
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06-23-2017, 10:56 AM
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#11
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Join Date: Feb 2014
Location: Syracuse
Posts: 3,501
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How long can one sector increase in cost over three times the rate of general inflation? There needs to be a breaking point eventually.
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“No, not rich. I am a poor man with money, which is not the same thing"
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06-23-2017, 10:57 AM
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#12
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Recycles dryer sheets
Join Date: Nov 2016
Location: San Jose
Posts: 464
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I feel that there will be a major revision in a way how health care operate in US during the next decade. Also, I'd expect inflation and weaker dollar. Therefore, predictions like that does not make much sense. Although I admit, the health care cost currently is very high (compared to other nations) and will stay high, just because there are enormous opportunities to earn money in this country, combined with high cost of education, drugs and equipment.
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06-23-2017, 11:11 AM
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#13
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Administrator
Join Date: Jan 2008
Location: Chicagoland
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Fidelity has published a yearly study of health care costs in retirement, since 2002. Last year's ( here) cost was estimated to be $260k. Their methodology is sound, and the cost is Medicare premiums together with all other out of pocket costs.
Given the prices charged for health care in the US and their rate of inflation, it is likely to be more, not less.
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06-23-2017, 11:45 AM
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#14
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Thinks s/he gets paid by the post
Join Date: Mar 2015
Location: philly
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Quick question. How did you guys go about calculating retiree health care cost? this is one area that has been baffling me. right now I have mega corp retiree health care 7500 a year but I'm actually hoping that goes down as honorable son #2 hits 25 and ages off my policy, then when I hit 65 I assumed medicare would cover most of the cost. I know I'll have to get "gap" insurance.
how did you get your numbers?
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06-23-2017, 12:10 PM
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#15
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,204
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Quote:
Originally Posted by Big_Hitter
https://www.bloomberg.com/news/artic...-in-retirement
"For a healthy 65-year-old couple retiring this year with a future adjusted gross annual income of less than $170,000 after adding in any tax-exempt income, projected lifetime health-care premiums add up to $321,994 in today's dollars. "
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Mom's costs are ~$350/month.... $200 medigap, $100 part B and $50 part D... $350*12*(100-65)*2 people is $294,000 and that is if the couple live to be 100... in reality it might more likely be 85 whcih would reduce the cost to $168,000. The $500,000 headline number sounds way out of line to me.
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06-23-2017, 12:11 PM
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#16
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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Quote:
Originally Posted by bclover
Quick question. How did you guys go about calculating retiree health care cost? this is one area that has been baffling me. right now I have mega corp retiree health care 7500 a year but I'm actually hoping that goes down as honorable son #2 hits 25 and ages off my policy, then when I hit 65 I assumed medicare would cover most of the cost. I know I'll have to get "gap" insurance.
how did you get your numbers?
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Don't assume it will go down when your DS leaves the policy as your costs will likely increase as you age until 65 and medicare.
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06-23-2017, 12:14 PM
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#17
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
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No, costs don't increase much as you age... most everything is taken care of between Medicare and Medigap. Most seniors that I know go to the hospital and the net bill ends up being a big, fat goose egg.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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06-23-2017, 12:15 PM
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#18
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Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: Syracuse
Posts: 3,501
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Thanks pb4uski. And thanks BCLover for bringing this up.
Does anyone have similar numbers to pb4uskis?
__________________
“No, not rich. I am a poor man with money, which is not the same thing"
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06-23-2017, 12:15 PM
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#19
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2007
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Quote:
Originally Posted by pb4uski
No, costs don't increase much as you age... most everything is taken care of between Medicare and Medigap. Most seniors that I know go to the hospital and the net bill ends up being a big, fat goose egg.
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I edited my post as I meant "until you hit 65"....
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06-23-2017, 12:17 PM
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#20
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Thinks s/he gets paid by the post
Join Date: Mar 2014
Location: Southern Cal
Posts: 4,032
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Quote:
Originally Posted by ivinsfan
Don't assume it will go down when your DS leaves the policy as your costs will likely increase as you age until 65 and medicare.
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Not for company's retiree heath insurance. I think it will increase with inflation but not related to age. It's the individual market you are referring to where it may increase with age.
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