Predictions - SS reform

[Beststash]

ER'd at 52 (54 now 55 in Dec 2005) - second best thing I have ever done (marriage #1). Most of my calcs are based on SS at 62 - I have 35 years in SS system and have heard rumors of raising to 38. Also method of changing COLA is rumored.
The longer that I am retired the less I am attracted to the aggressiveness that I think is necessary to compete in today's job market for higher paying positions.

Predictions ......How will SS changes affect ER's?? I am not that interested in the good or bad things that are necessary - rather the effect on early retirement present and future. Based upon my former employers actions - there is a tendency to push out middle managers and bring in youth and I am not sure that a lot of 50+ folks will have a lot of opportunity in today's market place.

What do you think??

 

[Martha]

I see older people competing for a bunch of sh***y jobs.

 

[charlie]

As for middle managers being nudged out the door,
it was up or out in '89 when I retired. I suspect the
trend has just gotten worse.

Cheers,

Charlie

 

[intercst]

ER'd at 52 (54 now 55 in Dec 2005) - second best thing I have ever done (marriage #1). Most of my calcs are based on SS at 62 - I have 35 years in SS system and have heard rumors of raising to 38. Also method of changing COLA is rumored.
The longer that I am retired the less I am attracted to the aggressiveness that I think is necessary to compete in today's job market for higher paying positions.

Predictions ......How will SS changes affect ER's?? I am not that interested in the good or bad things that are necessary - rather the effect on early retirement present and future. Based upon my former employers actions - there is a tendency to push out middle managers and bring in youth and I am not sure that a lot of 50+ folks will have a lot of opportunity in today's market place.

What do you think??

Social Security? Not much.

I retired 10 years ago at age 38 and, in an abundance of caution, I assumed that my Social Security check would be zero. If I collect anything at all, I'll treat it like lottery winnings and take a trip.

Medicare should be a much larger worry for retirees since the program is in worse fiscal shape than SS. If health insurance continues to increase in cost at 15% to 20% per year only the wealthiest of retirees will be able to afford it. I'm factoring in a $40,000/year health insurance premium in 2021 when I reach age 65. I hope I'm wrong.

intercst

 

[Eagle43]

Based upon my former employers actions - there is a tendency to push out middle managers and bring in youth and I am not sure that a lot of 50+ folks will have a lot of opportunity in today's market place.

What do you think??

I think age discrimination is wide-spread and hard to prove in court. Why?? Follow the money.

 

[MJ]

I'm factoring in a $40,000/year health insurance premium in 2021 when I reach age 65. I hope I'm wrong.

Is that for you only or your DW as well?

I'm sure a number of us here as well as 99% ( wild guess) of the people retiring at 65 or later hope you are wrong too !!! :-/

I currently have a 11% inflation rate on my health related expenses.

I will be 73 in 2021 and probably still single. I have approx. $11k allocated to health insurance including medicare. I guess I would have to take my travel money to get close to your $40k projection.

MJ

 

[haha]

Is that for you only or your DW as well?

I'm sure a number of us here as well as 99% ( wild guess) of the people retiring at 65 or later hope you are wrong too !!! :-/

I currently have a 11% inflation rate on my health related expenses.

I will be 73 in 2021 and probably still single. I have approx. $11k allocated to health insurance including medicare. I guess I would have to take my travel money to get close to your $40k projection.

MJ  

Long brefore this happens we will do a better job of rationing health care, and get the cost down.

Could any American corporation compete on any product, anywhere in the world, if they had to pay that kind of health premium?

Won't happen.

 

[EngrGal]

there is a tendency to push out middle managers and bring in youth and I am not sure that a lot of 50+ folks will have a lot of opportunity in today's market place.

This has been the case in the fairly recent past. However, the tide will be turning soon. This is based on demographics. HR departments are finally realizing the the baby boomers are not being followed by any similar-sized generations. The Gen X, and Gen Y (and whoever is following them) are much smaller population groups.

Forward-thinking large corporations, are already starting to put into place systems that will keep the Boomers working, and to retrain any Boomers whose skills are becoiming obsolete. Another thing that is fueling this trend to keep the Boomers working is the fact that the younger generations, once they are in the workforce, are demonstrating that they do not want to put their careers at the forefront of their lives, unlike their parents (the Boomers). So companies would rather keep their workaholic Boomers on board -- thus keeping a seasoned workforce that is used to putting the company ahead of other things in their lives.

I realize that these are sweeping generealizations, and that there individual exceptions to these statements, but, in toto, that's how these groups are behaving.

 

[Beststash]

Forward-thinking large corporations, are already starting to put into place systems that will keep the Boomers working, and to retrain any Boomers whose skills are becoming obsolete.

I agree with the "loyalty" factor for boomers, however the dominant mentality is now - "What can you do for me" - this has been brought on by actions of corps when times get tough - very seldom do you see the company "hunker-down" to keep their most valuable asset - their employees. The smart folks these days figure on getting the most they can and then moving up and on. When you see benefits, pensions, and health-care being expendable, it is hard to expect the same attitudes of the past. I hope this changes for I think that we are losing a lot of innovation, customer sat, and trust at the workplace.

For myself - keeping up with inflation on a fixed income, is my largest challenge. The equity markets seem to offer the largest hope but long-term becomes shorter as I become older. I do not have the luxury of making many mistakes as I did in the past.

 

[Tadpole]

Forward-thinking large corporations, are already starting to put into place systems that will keep the Boomers working, and to retrain any Boomers whose skills are becoming obsolete.

That might be true for the later boomers but I think the older ones are in real trouble with respect to keeping their jobs.

 

[intercst]

Is that for you only or your DW as well?

I'm sure a number of us here as well as 99% ( wild guess) of the people retiring at 65 or later hope you are wrong too !!! :-/

I currently have a 11% inflation rate on my health related expenses.

I will be 73 in 2021 and probably still single. I have approx. $11k allocated to health insurance including medicare. I guess I would have to take my travel money to get close to your $40k projection.

MJ  

Just me.

When I retired in 1994, I was paying $1,700/year for a PPO policy with a $100 annual deductible and $750 max annual out-of-pocket cost. Policy included full prescription drug coverage and dental.

For 2005, I'm paying $6,300/year for a PPO policy with a $1,000 annual deductible and $3,000 max annual out-of-pocket cost. I still have about the same drug and dental coverage.

The increase from $1,700 to $6,300 over 11 years represents a 13% per annum increase. If I get the same 13% per year rise over the next 16 years, the $6,300 I pay this year will be $44,500 in 2021 when I'm age 65.

The CPI has average about a 2% per annum increase over the 11 years I've been retired.

intercst

 

[Bob_Smith]

The increase from $1,700 to $6,300 over 11 years represents a 13% per annum increase. If I get the same 13% per year rise over the next 16 years, the $6,300 I pay this year will be $44,500 in 2021 when I'm age 65.

Yes but...

--The next 16 year run-up won't be nearly as easy for them to squeeze out of us as the first. As the Soup Nazi said to George Costanza: "You're pushing your luck little man!". They're already pushing the envelope. The breaking point is coming.

--Even if the price of health insurance becomes unaffordable to most, that will likely be temporary and most of us will probably survive just fine without it until the system is restored to some level of sanity. There may be some who get hit with something horribly expensive in the interim, but most of us probably won't.

--Even if we're forced to drop health insurance due to cost, that doesn't mean we won't have any health care. Most of us plan to spend a fair amount on insurance, and that money could be used to buy the health care we actually end up needing. For years I have spent FAR more on health insurance premiums than I have received in health care. If I can't afford the insurance, that money will be freed up to buy care, and there's a chance that many here would end up with cash they didn't need to spend.

--If the system doesn't change, and we are forced to go without insurance due to cost, chances are most citizens will be in the same boat. If that occurs, we should be able to negotiate a fee with our doctor. Some physicians are ALREADY swearing off insurance companies and accepting direct pay patients only. Drug prices would have to come down, or there will be a lot of cross-border markets for uninsured Americans.

I don't see how this system can survive while consuming an ever increasing percent of GDP. One way or another, most of us will do OK and receive the health care we need. There may be a few who are caught without a net at the absolute worst time, but the odds would have to be in our favor. Most of my ancestors lived to ripe old ages without any health care at all! IMHO, it would be overkill for prospective early retirees to project 11% or 13% health care inflation for years and years into the future. Certainly there needs to be extra built in to cover rapidly rising health care costs, but the sky is not the limit, IMO. I don't know what the limit is, but I don't think it's as high as some appear to be planning for.

 

[Cut-Throat]

I agree with Bob Smith. There is no way I'd pay for Insurance Premiums at these levels! - It's just about to the point where I'd consider self insuring.

Let's face it, we're all going to die someday anyway and 70% of the cost of all U.S. healthcare is administered in the last year of life. (IOW - Most of the time it doesn't work anyway, it's just expensive).

 

[John Galt]

Hello Cut-Throat! I have a laundry list of chronic
health issues. My experiences with medical
providers has been disappointing, with a couple of exceptions. Currently I have no family doctor and opt for
a walk-in clinic (Doc in a Box) or the ER as required.
Like you said, most of the testing and etc. is quite expensive and frequently
produces no good results. Of course, sometimes
you gotta use 'em (like attorneys).
I'll tell you though, my experience so far makes self-insuring quite tempting.

JG

 

[Michael]

I'm factoring in a $40,000/year health insurance premium in 2021 when I reach age 65.

Medicare has fairly low limits on coverage. To protect assets, people may need to continue some form of private medical insurance to cover what Medicare doesn't. I strongly suspect Medicare coverage will become even more stingy as its budget problems worsen. Medicaid will take virtually all of your assets before it kicks in, and it has budget problems of its own.

 

[intercst]

Yes but...

I don't see how this system can survive while consuming an ever increasing percent of GDP. One way or another, most of us will do OK and receive the health care we need. There may be a few who are caught without a net at the absolute worst time, but the odds would have to be in our favor. Most of my ancestors lived to ripe old ages without any health care at all! IMHO, it would be overkill for prospective early retirees to project 11% or 13% health care inflation for years and years into the future. Certainly there needs to be extra built in to cover rapidly rising health care costs, but the sky is not the limit, IMO. I don't know what the limit is, but I don't think it's as high as some appear to be planning for.

I agree, but if you want to stay early retired, you plan for worst-case scenarios (e.g., the Crash of 1929 and the Great Depression, World War III, and 13% annual increases in health care costs.)

If it doesn't happen, I'll buy a humongous RV.

intercst

 

[WR]

I agree, but if you want to stay early retired, you plan for worst-case scenarios (e.g., the Crash of 1929 and the Great Depression, World War III, and 13% annual increases in health care costs.)

Were you already planning this way before you officially retired or was this level of planning something that came about later, when you actually started to see the rate of increase of insurance?

 

[intercst]

Were you already planning this way before you officially retired or was this level of planning something that came about later, when you actually started to see the rate of increase of insurance?

I figured health care costs would be a problem over the long-term when I retired in 1994, so I kept about 15% of my stock portfolio in pharmaceutical and health care stocks as a hedge. Fortunately, my drug stocks went up more than my health insurance premiums.

intercst

 

[Bob_Smith]

I agree, but if you want to stay early retired, you plan for worst-case scenarios (e.g., the Crash of 1929 and the Great Depression, World War III, and 13% annual increases in health care costs.)

If it doesn't happen, I'll buy a humongous RV.

intercst

Yeah, I agree about planning for the worst - to a point. But planning for a Great Depression type deflation/massive unemployment AND $40,000 health insurance premiums simultaneously seems like overkill to me. A devastating 30s type of depression would likely crush spiraling health care costs.

I don't really trust isolated spending projections pushed far into to future. When done in isolation they can be unnecessarily pessimistic. I look at it this way: we'll likely do just fine as long as our income is able to keep pace with a typical working middle-class to lower middle-class family in our community. Health costs viewed in isolation look very grim to the early retiree, but wages in my community are rapidly losing ground relative to health care costs. IOW, we're all in the same boat. Something has to give.

 

[hocus]

Re: Predictions - SS reform as a

I look at it this way: we'll likely do just fine as long as our income is able to keep pace with a typical working middle-class to lower middle-class family in our community.

My risk assessment approach was similar to what you describe here, BobSmith. It was also a little different.

My approach was to hand in my resignation when my family's financial circumstances were as secure with me leaving the job as they would have been had I stayed at the job. It gets complicated to run through all the details, but the basic idea was not to seek perfect safety but not to permit myself to make us all worse off than we would have been otherwise. It's important to note here that I continue to "work" (and bring in some income, one hopes) during "retirement."

The health insurance thing is a big risk, I think. I don't make light of it at all. However, I also believe that aspiring early retirees in some circumstances will end up better off because they at least feel pressured to face the health insurance question whereas many of those planning conventional retirements are just assuming that they will be taken care of by their employers and that may end up not being the case.

 

[John Galt]

When it comes to predictions on SS reform, I am sticking
firmly with Murphy's Law.

JG

 

[Nords]

I still have about the same drug and dental coverage.

Why dental coverage? Is it a separate premium/coverage that can be cancelled?

The reason I'm asking is that I've read/heard that teeth tend to settle down in one's 40s. With frequent brushing/flossing, many ERs can spread out professional cleanings & exams to annually or even biennially. The premiums saved would almost pay for a root canal, not that one would be necessary.

I recognize that everyone's dentition differs, but if there's an expensive mistake in dispensing with dental insurance then I'm interested in learning about it sooner rather than later.

 

[intercst]

Why dental coverage?  Is it a separate premium/coverage that can be cancelled?

The reason I'm asking is that I've read/heard that teeth tend to settle down in one's 40s.  With frequent brushing/flossing, many ERs can spread out professional cleanings & exams to annually or even biennially.  The premiums saved would almost pay for a root canal, not that one would be necessary.

I recognize that everyone's dentition differs, but if there's an expensive mistake in dispensing with dental insurance then I'm interested in learning about it sooner rather than later.

My dental premium is breakeven after the insurance pays for my two 6-month check-ups and cleaning and a single filling. If I have anything else done, then I'm ahead of the game with the dental insurance. I cracked a tooth over Christmas that required a $900 cap, so it looks like I'll save some money being insured this year.

However, I think there's something like a $1,500 or $2,000 annual limit on the benefit. If I get 5 or 6 teeth knocked out, I'll have to pay out of pocket, or spread the treatment over several years.

intercst

 

[Nords]

OK, got it.

I still hate paying more in one year's premiums than I'd pay over four separate visits.

Guess I'll keep wearing my mouthguard when I spar at tae kwon do. Our first tournament is in three weeks...

 

[Bob_Smith]

The reason I'm asking is that I've read/heard that teeth tend to settle down in one's 40s.  With frequent brushing/flossing, many ERs can spread out professional cleanings & exams to annually or even biennially.  The premiums saved would almost pay for a root canal, not that one would be necessary.

Nords, I was faced with a decision - $75/month for group dental insurance (family plan) or self-insure. I chose self-insurance. I plan one annual cleaning.

Also, I haven't done it yet, but my dentist accepts Title 19. I'm going to try to negotiate for that rate. My pitch:

1. We'll pay cash upfront on the day of service.
2. We'll keep it between us - no blabbing to others about our arrangement.

I figure that he's willing to hassle with Medicaid forms and wait for their relatively low rate of pay, so why wouldn't he go for this? If he says no, I shop around. Has anyone else tried this?