Retire on 3k per month thoughts...

Hi Martha! Health care is a scary issue for many,
including me. Although I could have piled
up a million bucks if I had continued working, starting very late as I did I might never have ERed. So, in my case, I will have to be very creative
and take some risks. I've been lucky all my life and
hopefully this will continue. Unclemick is my
inspiration

JG

[Nords]

That's the title of Walter Updegrave's latest on financial planning.

If it's the first book one reads on the subject, then it's probably in the top 20 (behind multiple awards for "Four Pillars"). If it's not the first book you've read on the subject, then don't bother... not much new.

His treatment of medical insurance was fairly straightforward-- get it from your employer or get your own high-deductible catastrophic-coverage policy and then live healthy. (I'd love to see a healthcare study of the "real" medical costs of otherwise healthy people.) I have to agree that a healthcare backlash is eventually going to halt the inflationary spiral.

Speaking of medical-care issues, Updegrave had an interesting financial analysis of long-term healthcare. He claims that the epic 1991 study in teh New England Journal of Medicine included ALL nursing home care, even if just for a few days. Statistically "only" 20% of those over 65 would spend a year or more in LTC, and only 10% would spend more than five years. If you live by statistics, I guess that's pretty comforting-- right up there with only a 10% chance of dying by the time you're 65.

So he says that if your estate is under $100K, don't worry about LTC insurance because recent LTC costs are around $56K/year. You'll spend down your assets relatively quickly and you'll be on Medicaid before you'd recoup the costs of LTC insurance premiums.

If you have more than $2M net worth, again don't worry about LTC insurance. You'll have enough assets to handle all the expenses. Of course you should worry more how your spouse is planning to shield his/her assets before Medicaid kicks in, especially if that spouse is exhibiting a new interest in lethal weapons.

In the "gap" between $100K-$2M, LTC is probably worth the cost. It's less expensive than self-insurance and, if bought during one's 50s-60s, the total premium cost will probably be less than the benefits received later.

I forgot to mention in my 36K per year dollars to spend for my wife and I that I will be golfing more, thus getting better and winning untold amounts of cash from my golf buddies.
Perhaps even turning pro as I refine my game and get
my handicap down a bit...

Hey Nords......good post!

In addition to watching out for your spouse's "new
interest in lethal weapons", you should also be alert
for any small bottles exhibiting a skull and bones
on the label

JG

[unclemick]

Roll the dice - 11 years no health insurance, 3 years to medicare - Bon Temps Rolliere - New Orleans food, drink, smoke - weak on exercise. Heath Cobra was ~ $750/mo in 1992 - had I bought - I'd still be working. Maybe $600 total medical in eleven years.

All the women are covered though - including 3 years in ST fixed for my 88 year old mom in case of nursing home to cover the 36 mo look back for medicaid.

Total portfolio maybe 1 mil ex house, cars, misc real estate. Plan to get wild next year and spend 36k or over. Note SS next year, two small pensions, Mom's SS - 39k/yr taxable 'before' the portfolio.

1993 - 2003 varied low 12k/yr to more often 18-24k and gradually spending more on fun each year.

Heck - I may even buy a kayak.

[retire@40]

Roll the dice - 11 years no health insurance...Total portfolio maybe 1 mil ex house, cars, misc real estate.

Just curious if you have these assets protected God forbid you need a major operation costing say $100K. Or is your plan to pay the $100K out of pocket if the situation arises?

Although I am in my mid 30s, I've wondered about getting a complete physical exam at the end of age 63 and canceling my health insurance which would probably save me a few thousand dollars a month by then and let Medicare kick in at 65.

...Although I am in my mid 30s, I've wondered about getting a complete physical exam at the end of age 63 and canceling my health insurance which would probably save me a few thousand dollars a month by then and let Medicare kick in at 65.

Whenever I think about the risks of dropping health insurance, I am reminded of unplanned injuries or illness, like an indigent motorist driving into me when I'm out walking or bicycling.

[unclemick]

I couldn't afford both health insurance and ER - it wasn't a choice. With passage of time and a rising stock market in the 90's, eligible for earrly SS in 7 mo.'s - may or may not go shopping for a high deductible.

Remember - the women were covered and 'their' retirement would not be derailed if I lost/spent my entire portfolio. It would've pissed me off - of course, but that was the gamble I took.

[Zipper]

If you are a smoker unclemick, all bets are off!

You're playing against a stacked deck.

Unclemick is still my hero. My DW smokes. I have
never smoked cigarettes (except as a teen) but I
understand the appeal. I could start smoking today
and enjoy every one. I will not though. I am a
hypochondriac, and that would add to my angst.
Bottom line.................so far skipping the health insurance since 1998 would have saved a ton of money.
I don't have the guts. I admit it.

JG

[gayl]

I forgot to mention in my 36K per year dollars to spend for my wife and I that I will be golfing more, thus getting better and winning untold amounts of cash from my golf buddies.
Perhaps even turning pro as I refine my game and get
my handicap down a bit... *

This is why I feel that fallacy of 60-80% of pre-retirement income needed is just that ... a fallacy. I am living on 100% of what I spent while working, invested the rest. And some months it takes almost every penny leaving me only 250 to save. My hobbies are a lot more expensive now and I have a lot more time for them.

However, it is still done on less than 3k per month b/c I own my own home under Prop 13.

[LEX]

A Few thoughts on the valuable reference provided by Nords;

The American medical system is really just a form of collatoral confiscation through collection agents and lawyers. *Unless you have >1.5MM IMO you have to insure and pay more than its worth so as avoid bankruptcy, or become judgement proof, taking steps that are in the same category of moral questionability as those routinely used by the insurance companies and their de facto hospital systems, say by hiding assets and placing property that is not in your name (say a trust or corporation or a son or daughter you trust). *Those of you who have been through a divorce have an advantage in how post medical financial collections work thier way through the courts. *

There are three standards of medical care in the US:

1) Free for those that are judgement proof

2) Very expensive and marginal for many who have acted responsibly, followed the "Rules" and insured, hoping the health policy will insulate them from a six figure "wallet extraction" post care, and

3) world class for the truly rich who can act as their own insurer.

I have close friends who are practicing Doctors here in Phoenix who will attest to this tiered status. The most common example of level one are the illegal alliens form Mexico who can walk into any hospital and get treatment. *The law requires the rendering of emergency aid. *Then they disappear into their ranks, without any way to collect judgements for the care. *They will bring their whole families into the ER waiting room and pre-empt paying patients with "level two" status. *Then there are those on welfare...they are better cared for than the media would have you believe. *Then there are those with real skin in the game. *Its always reassuring to be waiting in the ER with a serious injury, and prior to being seen by the nurse or, if you are lucky, a trained Doctor, *having to fill out what is basically what debt collection lawyers call a confession of judgement prior to being seen by a Doctor. *The illegals can't even read this form of technical english, don't care, and have fake ID anyway, so they just waltz right in. *Folks such as many on this board who actually saved and attempt to be responsible for themselves put all their assets on the line when they enter a hospital. *The level three folks have thier own doctor make arrangements and worry about the room decor as if it were a suite in a medical hotel. *

Its become a true nightmare for the modest but responsible American citizen attempting to live a decent retirement. *I wonder if it is actually easier for me to catch a flight to Iraq or some other US subsidized zone and get free medical care paid for by my tax dollars than to afford health insurance premiums and attempt the same at home. *It all really pisses me off!!!

The American medical system is really just a form of collatoral confiscation through collection agents and lawyers. *Unless you have >1.5MM IMO you have to insure and pay more than its worth so as avoid bankruptcy, or become judgement proof, taking steps that are in the same category of moral questionability as those routinely used by the insurance companies and their de facto hospital systems, say by hiding assets and placing property that is not in your name (say a trust or corporation or a son or daughter you trust).
...

Its become a true nightmare for the modest but responsible American citizen attempting to live a decent retirement. *I wonder if it is actually easier for me to catch a flight to Iraq or some other US subsidized zone and get free medical care paid for by my tax dollars than to afford health insurance premiums and attempt the same at home. *It all really pisses me off!!!

I pay $240 (2005 rates, in my mid-40s, single) per month for a pretty good coverage individual plan through Kaiser Permanente Northern California.

If you're basically healthy it seems to me that coverage is available at realistic prices. (And that $240 is after many years of large increases). I've got a friend who is a Doc. at Kaiser and that also gives me some confidence in their system.

Altogether, health insurance is a pain, but is certainly is not a barrier to ER...

[Nords]

I wonder if it is actually easier for me to catch a flight to Iraq or some other US subsidized zone and get free medical care paid for by my tax dollars than to afford health insurance premiums and attempt the same at home. *It all really pisses me off!!! >:(

Iraq might work, but Thailand is probably "better".
http://www.businessweek.com/@@*sVgk4...7/b3870074.htm or http://www.csmngt.com/medical2.htm

[Beachbumz]

I just applied for health insurance with Humana in Florida. The rate for both of us is $175 month for a 5000 deductible (separate $500 ded for prescriptions) and a dr copay. We are both 37 and in basically good health, except for a couple of minor things. I'm taking cholesterol medicine and have "gout". I didn't think the gout thing was a big deal, but Blue Cross would not even consider the application since I had an attack within the last 12 months. That's what I get for being honest, I didn't even go to the doctor! It will be interesting to see what Humana does.

Bottom line, health insurance is not that expense at a young age if you {can} get it when you are healthy.

For much of my working life I had BC/BS health insurance
and liked it, especially in Michigan where it was always
welcomed by providers and where so many had it.

About 5 years ago I tried to get an individual Blue Cross
policy. I thought my health problems were pretty minor
and wouldn't have minded a rider to exclude certain conditions. I applied twice. They wouldn't touch me.

JG

[JWV]

I have close friends who are practicing Doctors here in Phoenix who will attest to this tiered status.

I will agree that there is stratification of health care but it goes much deeper than what side of the border you came from. A lot depends on what you know and who you know whether you are white, brown or purple with pink stripes. I cringe to think about what situations people without knowledge of health care, billing and insurance must sometimes find themselves in. Anyone who thinks that everyone gets the same care is deluded.

Also, I believe most ED/ERs triage as to severity of complaint. That's not to say that these depts are not clogged with all sorts of people who don't really have an emergency and EDs have become the clinic for many people. However, I would venture to guess that in the most cases, the most emergent get seen first.

Judy

[Martha]

And let's not forget, that emergency rooms do no provide drugs or ongoing care for chronic conditions. You will not get chemo in the emergency room. You will be treated for an asthma attack but won't get the drugs to treat the asthma to prevent the next attack.

With asthma, an increasing common condition, I cannot buy insurance except through my employer or on a risk market.

[MetryOp]

Last year my total expenses were a bit over $37k, but this included about $10.5k of extraordinary expenses. Health insurance now runs about 20% in my average yearly expense of ~$26k.

I'm a single male, age 47, and my health insurance premium is up to $441 per month for a major medical policy with $2,500 deductible. I shopped around but with a history of cancer (acute leukemia) within the last 5 years, nobody will touch me. The health insurance company I'm with, I started in 1991 at $39 per month premium. I'm glad I had coverage when I came down with leukemia. The insurance company paid out about $250k. My doctor said that was the lowest amount for my illness she'd seen due to my otherwise excellent health. That helped me avoid the complications that can accompany the cancer.

I cringe every month when I pay that premium, but I'm lucky to have it and thankful to be alive.

MetryOp

[haha]

Metry-Op-- congratulations on beating the cancer. And Happy New Year!


Mikey