Article - 35% of Millionaires won't be able to retire

[NW-Bound]

The big issue I think is that once you turn 65, Medicaid goes from being income proven to being asset proven (I think). It is some really low figure like $10,000 in total financial assets other than home and 1 car and grave plot!

Before 65 you can have $10 million and be on medicaid.

As I said, the US system is a patchwork full of inconsistencies. We are used to it, and have learned to cope with it. But if you describe it to a foreigner, he will shake his head in disbelief.

 

[Teacher Terry]

It was definitely cheaper to be on my state insurance than Medicare. I pay 400/month and my supplement goes up every year. However, my friends on advantage plans are happy until they get a serious medical condition and then the care is abysmal.

It’s going to be a miracle if one of my friends survives since it’s taking her so long to get the tests, etc that she needs for a serious lung condition. Mine is 15% of my take home income which is as much as my mortgage.

 

[jimbee]

It is true that Medicare is dirt-cheap compared to private insurance, such as paid by corporations for their workers.

But it is not all subsidy, considering that workers "prepay" for this during their lifetime. Many don't live to 65 to get any benefit.

The Medicare tax you pay with earned income goes toward Medicare Part A, not Parts B or D. This webpage explains how Medicare is funded. https://www.medicare.gov/about-us/how-is-medicare-funded

 

[ejman]

As I said, the US system is a patchwork full of inconsistencies. We are used to it, and have learned to cope with it. But if you describe it to a foreigner, he will shake his head in disbelief.

Yes, Its has been an interesting journey when one has a serious ongoing medical condition. I have regular medicare with part G supplement so in hospital treatments, infusions, medical visits, tests etc have all been covered subject to the nominal part G deductible. (unlike those folks that are seduced by the low rates of Medicare Advantage plans and then are hit by a wall of coverage denials and restrictions and stress on top of their illness if they are unfortunate enough to require serious medical care - I see that all the time at forums dedicated to people with my condition).
Anyway, the system glitches when it comes to Part D (drug coverage). The FDA just approved a new drug for treatment of my condition. This drug is $18,000 a month (oral med) with treatment lasting usually one year. All initial attempts with Part D carrier resulted in denial of coverage. finally with extensive efforts by my Doctors and also by drug maker (vested interest anyone?) Insurance agree to cover cost with $3,600 monthly deductible. Working on that.

 

[aja8888]

Yes, Its has been an interesting journey when one has a serious ongoing medical condition. I have regular medicare with part G supplement so in hospital treatments, infusions, medical visits, tests etc have all been covered subject to the nominal part G deductible. (unlike those folks that are seduced by the low rates of Medicare Advantage plans and then are hit by a wall of coverage denials and restrictions and stress on top of their illness if they are unfortunate enough to require serious medical care - I see that all the time at forums dedicated to people with my condition).
Anyway, the system glitches when it comes to Part D (drug coverage). The FDA just approved a new drug for treatment of my condition. This drug is $18,000 a month (oral med) with treatment lasting usually one year. All initial attempts with Part D carrier resulted in denial of coverage. finally with extensive efforts by my Doctors and also by drug maker (vested interest anyone?) Insurance agree to cover cost with $3,600 monthly deductible. Working on that.

My emphasis on the above. The one year my DW was on a MA PPO plan, she was denied coverage (admittance) for an acute nursing facility even though the doctors recommended it. Instead, she was sent to a rehab facility with minimal nurse coverage. We are back on Medicare and Plan G going forward.

MA plans never discuss the fact that the insurance company has the final decision on the level of care you should be placed under.

Also, good luck if you get cancer. Places like M.D. Anderson here in Texas (world class cancer facility) will not accept coverage for MA plans. They will take you in and you will pay huge out of network charges.

Just remember, if Joe Namath says "it free" on TV, don't believe him!

 

[Alex The Great]

Doesn't look like you've allowed much for capital expenditures, replacing stuff that gets old and/or breaks:
New cell phones.
New gas grill.
New flat screen TV.
New vacuum cleaner.
New power tools.

It all depend on life style. I do not care about all these fancy items. Cell phones are cheap, no TV or gas grill in house. I do have 15 years old vacuum cleaner which still works fine. Power tools are rarely in use and will last forever.

New vehicles.
New roof.

These are important items. I'd include one car per 10 years, and one roof per 25 years into the budget.
But I live ~15 years in my house and it is 30 years old and I do not plan on roof replacement because my plan is to move into lower cost area may be in 5 years or so. Meantime use some patches for the roof.

 

[Trailwalker]

The big issue I think is that once you turn 65, Medicaid goes from being income proven to being asset proven (I think). It is some really low figure like $10,000 in total financial assets other than home and 1 car and grave plot!

Before 65 you can have $10 million and be on medicaid.

Not true for disabled adults receiving SSI. My son's asset limit is $2000.

 

[oldphd]

MA plans never discuss the fact that the insurance company has the final decision on the level of care you should be placed under.

Also, good luck if you get cancer. Places like M.D. Anderson here in Texas (world class cancer facility) will not accept coverage for MA plans. They will take you in and you will pay huge out of network charges.

Just remember, if Joe Namath says "it free" on TV, don't believe him!

MA plans vary, I don't think you can make such a blanket statement. DW is covered on a MA plan through her teacher retirement program. We aren't in TX, but she is currently being treated for cancer at an MD Anderson center (my understanding is other healthcare places can go through a certification process). Her case was reviewed by TX docs with regards to treatments. The coverage has all been in network and very reasonable, IMHO, when looking at our cost vs. total cost.

 

[daylatedollarshort]

It all depend on life style. I do not care about all these fancy items. Cell phones are cheap, no TV or gas grill in house. I do have 15 years old vacuum cleaner which still works fine. Power tools are rarely in use and will last forever......These are important items. I'd include one car per 10 years, and one roof per 25 years into the budget.
But I live ~15 years in my house and it is 30 years old and I do not plan on roof replacement because my plan is to move into lower cost area may be in 5 years or so. Meantime use some patches for the roof.

We also try to have a low overhead lifestyle. My cell phone was $20 from Consumer Cellular special. Last big screen TV - $0 on a Freecycle type site and it works great. Last grill was free for doing product reviews, but we didn't use it so one of our kids took it. Our last vacuum cleaner was free from doing product reviews. We don't buy many power tools. Our roof has a longer life expectancy than we do. Our cars are usually good value cars like a few years old Camry with good resale value. Trading in one used Camry for another used Camry with less mileage every 10 years usually isn't a huge expense for us. Plus we drive less than a few thousand miles a year these days so we don't have a lot of gas or car expenses. We live between an urban area and a state park, so everything from hiking to shopping is close by, some of it walkable. For longer trips we usually take the train which has discount senior fares.

We live a lot like the people profiled in The Millionaire Next Door, where one of the chapters is Frugal, Frugal, Frugal.

 

[audreyh1]

It is true that Medicare is dirt-cheap compared to private insurance, such as paid by corporations for their workers.

But it is not all subsidy, considering that workers "prepay" for this during their lifetime. Many don't live to 65 to get any benefit.

You are only pre-paying for Medicare Part A, not Medicare Part B.

 

[aja8888]

MA plans vary, I don't think you can make such a blanket statement. DW is covered on a MA plan through her teacher retirement program. We aren't in TX, but she is currently being treated for cancer at an MD Anderson center (my understanding is other healthcare places can go through a certification process). Her case was reviewed by TX docs with regards to treatments. The coverage has all been in network and very reasonable, IMHO, when looking at our cost vs. total cost.

Well you are lucky then as the plans around here I have looked at MDA is not in network (we are in TX). But there are hundreds of different providers so I am sure coverage varies. Then again, as a Teachers retirement plan, it may be some modification of the "run of the mill" MA plan. I understand some government employee sponsored MA plans are very good too with more coverage than us common folks are offered.

 

[Samsung4321]

As I said, the US system is a patchwork full of inconsistencies. We are used to it, and have learned to cope with it. But if you describe it to a foreigner, he will shake his head in disbelief.

Would Artificial Intelligence cope?

Our hospital only insurance $A3,626.40 / y:
https://www.medibank.com.au/health-insurance/compare-packages/?scale=C

Made simple by bulk billing ('free') GPs, self insured dental.

Pharmaceuticals three fold benefit:
. Safety Net threshold $A1,542.10 (we much below).
. drug subsidies.
. drug only subsidised to the extent that is shows evidenced benefit relative to others.
https://www.pbs.gov.au/info/healthpro/explanatory-notes/section1/Section_1_5_Explanatory_Notes

'Prescription Drugs: U.S. retail level prices were 2 to 4 times higher than prices in the comparison countries'
https://www.gao.gov/products/gao-21-282

 

[TheWizard]

We also try to have a low overhead lifestyle. My cell phone was $20 from Consumer Cellular special. Last big screen TV - $0 on a Freecycle type site and it works great. Last grill was free for doing product reviews, but we didn't use it so one of our kids took it. Our last vacuum cleaner was free from doing product reviews. We don't buy many power tools. Our roof has a longer life expectancy than we do. Our cars are usually good value cars like a few years old Camry with good resale value. Trading in one used Camry for another used Camry with less mileage every 10 years usually isn't a huge expense for us. Plus we drive less than a few thousand miles a year these days so we don't have a lot of gas or car expenses. We live between an urban area and a state park, so everything from hiking to shopping is close by, some of it walkable. For longer trips we usually take the train which has discount senior fares.

We live a lot like the people profiled in The Millionaire Next Door, where one of the chapters is Frugal, Frugal, Frugal.

Well I guess I'm different then.
When stuff gets old and/or breaks, I tend to get a better quality replacement.

My Husqvarna chainsaw and leaf blower are examples.

When my hammer drill bit the dust, I went to a different technology: an SDS+ rotary hammer, my favorite new tool of last year.

My girlfriend's gas grill's el cheapo replacement H burner rotted out again, so I threw the whole out and bought her a new Weber Genesis grill. That thing is nice!

I'm in the market for a new Mustang next year to replace my 2008 convertible. No idea how that'll work out with the ongoing chip shortage...

 

[MissMolly]

Well you are lucky then as the plans around here I have looked at MDA is not in network (we are in TX). But there are hundreds of different providers so I am sure coverage varies. Then again, as a Teachers retirement plan, it may be some modification of the "run of the mill" MA plan. I understand some government employee sponsored MA plans are very good too with more coverage than us common folks are offered.

Medicare Part C, also known as the Medicare Advantage Plan, replaces traditional Medicare. MD Anderson is contracted with the following Medicare Advantage plans:

Blue Cross & Blue Shield of Illinois
Blue Cross & Blue Shield of Oklahoma
Blue Cross & Blue Shield of Montana
Blue Cross & Blue Shield of New Mexico
Blue Cross & Blue Shield of Texas

We also have working relationships with other Medicare Advantage HMO and PPO plans. Please contact your plan to determine if they will work with MD Anderson.

https://www.mdanderson.org/patients-family/becoming-our-patient/planning-for-care/insurance-billing-financial-support/medicare-medicaid.html

 

[Samsung4321]

Well I guess I'm different then.
When stuff gets old and/or breaks, I tend to get a better quality replacement.

The stuff you mentioned would not change annual expenditure much. Lumped under 'entertainment - retail therapy' it would be a barely noticeable bump. Fancy car each year excepted.

 

[explanade]

The theoretical financial risk with Medicare is prescription drug.

Even with supplemental drug insurance your risk is uncapped.

Catastrophic coverage (from Medicare)

Once you've spent $7,050 out-of-pocket in 2022 ($7,400 in 2023), you're out of the coverage gap. Once you get out of the coverage gap (Medicare prescription drug coverage), you automatically get "catastrophic coverage." It assures you only pay a small coinsurance percentage or copayment for covered drugs for the rest of the year.

If memory serves, the "small coinsurance percentage" is 20%. So in theory you have "unlimited" risk. In practice, not so much…

There are also drugs well into the 6-figure range. I don't know if those are take one course and you're cured or take one course and you may need more or your condition isn't treated.

One company I have invested with in the past has a $2 million dollar drug, so 20% of that would be a penny or two!

 

[braumeister]

There are also drugs well into the 6-figure range. I don't know if those are take one course and you're cured or take one course and you may need more or your condition isn't treated.

DW is on a drug with a retail cost of $500 per pill. One pill a day. For life.

She is enrolled in a clinical trial and the manufacturer provides the drug free, but if someone needed it and didn't have the right coverage ...

 

[daylatedollarshort]

Well I guess I'm different then.
When stuff gets old and/or breaks, I tend to get a better quality replacement.

My Husqvarna chainsaw and leaf blower are examples.

When my hammer drill bit the dust, I went to a different technology: an SDS+ rotary hammer, my favorite new tool of last year.

My girlfriend's gas grill's el cheapo replacement H burner rotted out again, so I threw the whole out and bought her a new Weber Genesis grill. That thing is nice!

I'm in the market for a new Mustang next year to replace my 2008 convertible. No idea how that'll work out with the ongoing chip shortage...

But I didn't post anything about cheap quality - you added that on your own. Camry type cars are highly rated, and last I checked with better repair records that Mustangs. The grill was really nice we just didn't use it. The vacuum was a Dyson. We don't buy cheap power tools - we just rarely buy any power tools at all. Not spending more than you have to for goods and not buying goods you don't need or want is different than buying cheap goods.

 

[TheWizard]

But I didn't post anything about cheap quality - you added that on your own. Camry type cars are highly rated, and last I checked with better repair records that Mustangs. The grill was really nice we just didn't use it. The vacuum was a Dyson. We don't buy cheap power tools - we just rarely buy any power tools at all. Not spending more than you have to for goods and not buying goods you don't need or want is different than buying cheap goods.

You are correct on some of those points.
I realize that not all 72 year old retirees need a chainsaw to cut firewood with
I used some of my personal examples but the point was more general.

And that is that even retirees need to budget for capital replacement of practically everything on their property that can wear out.
When I put together an "expenses" spreadsheet prior to retirement in 2013, I think I had around $1500 a month for this category, including vehicle replacement.

So that's something I look for when people talk about retirement budgets...

 

[aaronc879]

You are correct on some of those points.
I realize that not all 72 year old retirees need a chainsaw to cut firewood with
I used some of my personal examples but the point was more general.

And that is that even retirees need to budget for capital replacement of practically everything on their property that can wear out.
When I put together an "expenses" spreadsheet prior to retirement in 2013, I think I had around $1500 a month for this category, including vehicle replacement.

So that's something I look for when people talk about retirement budgets...

I'm sure you weren't talking about me but the spending I posted was just that, my spending for this year. It was not a budget for retirement. If I was coming up with a long term budget it would include money for new car, roof, and such. I don't recall anyone else talking about a budget either, just listing their current year expenses. Not the same thing.

 

[finnski1]

DW is on a drug with a retail cost of $500 per pill. One pill a day. For life.

She is enrolled in a clinical trial and the manufacturer provides the drug free, but if someone needed it and didn't have the right coverage ...

Wow. That would be $183,000 per year for one pill. Crazy.

 

[TheWizard]

I'm sure you weren't talking about me but the spending I posted was just that, my spending for this year. It was not a budget for retirement. If I was coming up with a long term budget it would include money for new car, roof, and such. I don't recall anyone else talking about a budget either, just listing their current year expenses. Not the same thing.

You make an excellent point.
And since I don't categorize or keep track of my expenditures in retirement, I should probably quit this thread...

 

[ejman]

There are also drugs well into the 6-figure range. I don't know if those are take one course and you're cured or take one course and you may need more or your condition isn't treated.

The particular medicine I take is 6 pills a day at a cost of $100 each pill. So that's $219,000 for 1 year Fortunately Ins. covers 80% so that leaves a not so small $43,800 deductible. Treatment is usually for one year. No cure currently exists but remission is possible for some extended time. If the drug doesn't induce remission within 1 year then I guess it'll be plan b. Hopefully they can come up with plan b before the year is up . On the bright side I also have had about 20 Rituxan infusions ($15,000 ea) but since those are done in an infusion clinic under Medicare part A&B I pay zero.

 

[oldphd]

Well you are lucky then as the plans around here I have looked at MDA is not in network (we are in TX). But there are hundreds of different providers so I am sure coverage varies. Then again, as a Teachers retirement plan, it may be some modification of the "run of the mill" MA plan. I understand some government employee sponsored MA plans are very good too with more coverage than us common folks are offered.

My only point was that MA plans vary. The one she is offered through her retirement plan is good with any health provider that takes Medicare. And it has relatively low copays and deductibles. However, it is not "free" as you pointed out with the Joe Namath reference. I would call us common folks... she just barely qualified for a pension on her state teachers plan with 15 years of service since she stayed home when we had kids and was unable to get another job with a state employer, presumably because she was too expensive. Our retirement is primarily funded by my earnings history. Her pension is not enough to cover our health care cost, we pay them every month. But it's a choice we made because it is a good health plan. And given her health care needs it has proven to be a good choice.

As an aside, I wish you the best with your DW's health challenges. Over the last several years, my DW has experienced multiple serious issues requiring open heart surgery, cancer surgery, and chemo. Her mobility is currently limited due to the chemo, she is utilizing a walker for stability after a fall due to having issues with walking across a hardwood floor in our home. I sympathize with you when it comes to being a caregiver, and hope for as good an outcome as possible for both of us!

 

[GaryInCO]

The particular medicine I take is 6 pills a day at a cost of $100 each pill. So that's $219,000 for 1 year

I'm on two cancer meds. They work fabulously -- the otherwise-incurable cancer is in remission, no side effects -- but they don't come cheap. $1000 per DAY.

Medicare has about a $7000 "deductible" (not really but close enough) and after that part D pays 95%. But 5% of $30k per month is $1500 per month. Plus over $500 per month for the "deductible." So even though I have full coverage, it would be $25k out of pocket per year just for the meds.

Fortunately my doc got me into a program where the pharma cos provide the drugs for free. Don't ask me how that works, but I ain't complainin'.