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$500,000 Surprise: Health Care Sticker Shock Awaits You in Retirement
Old 06-23-2017, 09:44 AM   #1
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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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Old 06-23-2017, 10:07 AM   #2
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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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Old 06-23-2017, 10:14 AM   #3
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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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Old 06-23-2017, 10:16 AM   #4
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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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Old 06-23-2017, 10:18 AM   #5
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Originally Posted by Big_Hitter View Post
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. "
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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Old 06-23-2017, 10:19 AM   #6
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I tried... ;-)
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Old 06-23-2017, 10:21 AM   #7
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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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Old 06-23-2017, 10:26 AM   #8
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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?
you have to increase the 1340 with medical inflation
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Old 06-23-2017, 10:45 AM   #9
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you have to increase the 1340 with medical inflation


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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Old 06-23-2017, 10:52 AM   #10
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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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Old 06-23-2017, 10:56 AM   #11
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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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Old 06-23-2017, 10:57 AM   #12
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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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Old 06-23-2017, 11:11 AM   #13
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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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Old 06-23-2017, 11:45 AM   #14
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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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Old 06-23-2017, 12:10 PM   #15
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Quote:
Originally Posted by Big_Hitter View Post
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. "
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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Old 06-23-2017, 12:11 PM   #16
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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?
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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Old 06-23-2017, 12:14 PM   #17
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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.
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Old 06-23-2017, 12:15 PM   #18
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Thanks pb4uski. And thanks BCLover for bringing this up.
Does anyone have similar numbers to pb4uskis?
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Old 06-23-2017, 12:15 PM   #19
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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.
I edited my post as I meant "until you hit 65"....
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Old 06-23-2017, 12:17 PM   #20
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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.
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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