What's Driving Americans to Retire Abroad? Money -- or Lack of It

[wanderer69]

This is a huge one for me:

One of the most pressing financial concerns facing prospective retirees is whether they will have enough money to pay for medical and long-term care expenses. Health care costs have risen rapidly over the last decade and show no signs of abating. A 65-year-old couple retiring in 2012 is estimated to need $240,000 to cover out-of-pocket medical expenses -- the costs not covered by Medicare -- throughout retirement, according to the latest retiree health care costs estimate calculated by Fidelity Investments. This represents a 50% increase from 2002, when the estimate was $160,000.
Out-of-pocket medical costs are likely to continue to rise, says Olivia S. Mitchell, a Wharton professor who specializes in health/retirement analysis and policy. "Nobody knows how the U.S. will ultimately resolve its fiscal problems," she says. "Medicare and Social Security are the biggest drain on the budget. I believe that more of the retiree health care cost burden will be borne by consumers in the form of higher co-pays and higher premiums in the future."
Many countries offer subsidized national health care. Depending on citizenship and age requirements, foreigners are often eligible for the programs, and the level of medical care is generally quite high. "Medical tourism is becoming very popular to Singapore, India and Thailand," says Mitchell, executive director of the Pension Research Council. "Many of the doctors in those countries trained in the U.S., and the costs might be a quarter of U.S. fees."


What's Driving Americans to Retire Abroad? Money -- or Lack of It - Knowledge@Wharton

 

[fritz]

This is a huge one for me:

One of the most pressing financial concerns facing prospective retirees is whether they will have enough money to pay for medical and long-term care expenses. Health care costs have risen rapidly over the last decade and show no signs of abating. A 65-year-old couple retiring in 2012 is estimated to need $240,000 to cover out-of-pocket medical expenses -- the costs not covered by Medicare -- throughout retirement, according to the latest retiree health care costs estimate calculated by Fidelity Investments. This represents a 50% increase from 2002, when the estimate was $160,000.
Out-of-pocket medical costs are likely to continue to rise, says Olivia S. Mitchell, a Wharton professor who specializes in health/retirement analysis and policy. "Nobody knows how the U.S. will ultimately resolve its fiscal problems," she says. "Medicare and Social Security are the biggest drain on the budget. I believe that more of the retiree health care cost burden will be borne by consumers in the form of higher co-pays and higher premiums in the future."
Many countries offer subsidized national health care. Depending on citizenship and age requirements, foreigners are often eligible for the programs, and the level of medical care is generally quite high. "Medical tourism is becoming very popular to Singapore, India and Thailand," says Mitchell, executive director of the Pension Research Council. "Many of the doctors in those countries trained in the U.S., and the costs might be a quarter of U.S. fees."


What's Driving Americans to Retire Abroad? Money -- or Lack of It - Knowledge@Wharton

I believe that estimate is higher than the average "net worth" of people over 65.

 

[walkinwood]

I linked to this article a few days ago in a long thread on retiring abroad.

http://www.early-retirement.org/for...-the-us-more-rhetoric-than-reality-61137.html

 

[NYEXPAT]

I have been retired for almost 25 years (10 years overseas) and although medical costs were not a primary driver for leaving the USA, they were a factor.

I have private health insurance for a family of 3 and it runs about $65.00/month.

In addition I have free medical in the National Health system, through my DW's work.

DW happens to work in an International Clinic and the Doctors routinely see us for free as a courtesy to my DW.

In 6 years, I will be eligible for Medicare and as other Expats do, will probably check myself in a "great hospital" in the US once a year for a complete tune up.

As, I do not take any medications and rarely need to see a doctor, my largest bills here and in the USA were always Dental. In the USA I typically spent $1500-$2,000 per year and now probably spend less than $200.00

 

[zinger1457]

In 6 years, I will be eligible for Medicare and as other Expats do, will probably check myself in a "great hospital" in the US once a year for a complete tune up.

Just curious, when it comes to an annual checkup what can you get at a 'great hospital' in the US that you can't get at a hospital overseas? Besides a higher bill!

 

[nun]

IMHO the article misses the point. Costs cannot simply continue to rise when people cannot afford to pay them. It's a classic bubble and is bound to burst.

 

[NYEXPAT]

Just curious, when it comes to an annual checkup what can you get at a 'great hospital' in the US that you can't get at a hospital overseas? Besides a higher bill!

I know next to nothing on Medicare. Expats here in their 70's tell me that once every year they fly to the USA and walk into the emergency room complaining of Dizziness or chest pains then stay for a week or two getting every kind of test known to man done on them and it is paid for by medicare.

 

[aaronc879]

Doesn't Medicare cover most costs? $240,000 out of pocket seem really high unless you have major pre-existing conditions. My grandma broke her hip and after surgery and several days in the hospital, her total bill was a couple hundred dollars. The rest was covered by Medicare. She has no supplemental coverage nor has anyone in my family ever had any supplemental. No one in my family has ever had $240,000 liquid net worth either and have gotten by just fine. My other grandma has only been to a doctor twice in the last 60 years. Once for cataract surgery and once for the physical they forced her to have before they'd do the surgery. She owed nothing, not a penny. Medicare covered it all.

 

[marko]

Doesn't Medicare cover most costs? $240,000 out of pocket seem really high unless you have major pre-existing conditions. My grandma broke her hip and after surgery and several days in the hospital, her total bill was a couple hundred dollars. The rest was covered by Medicare. She has no supplemental coverage nor has anyone in my family ever had any supplemental. No one in my family has ever had $240,000 liquid net worth either and have gotten by just fine. My other grandma has only been to a doctor twice in the last 60 years. Once for cataract surgery and once for the physical they forced her to have before they'd do the surgery. She owed nothing, not a penny. Medicare covered it all.

Yeah, I don't know where they're getting their numbers.

Could they be factoring in changes to Medicare re: ACA?

My 82 year old mom fell and hit her head. Four days in the hospital, CAT scans, MRIs, etc etc..... ran up a $25K bill. Her cost: twenty bucks (literally).

My simple math says that $240K divided by (lets say) 20 years to age 85 is $12K per year OVER what Medicare pays. Ummmmm sounds a little high to me.

 

[bubba]

I don't really know enough about Medicare to comment, but I thought most people who had Medicare purchased a supplemental policy through an insurance company. A lady here at work turned 65 last year and she told me that she signed up for Medicare coverage and bought a supplement thru BC/BS.

 

[FIREd]

It doesn't sound that high to me. MIL is covered by Medicare but still pays around $7,000 a year in health-related costs with no major medical condition (Medicare part B and D premiums, co-pays, supplemental insurance premiums, LTC insurance premiums, dental, vision, etc...). So if she lives to see 90, she will have paid close to $175K on pretty basic health-related expenses from age 65 (assuming that healthcare costs don't rise faster than headline inflation, ha!). If she is unlucky, even a short stay in a nursing home could send her cost toward the $240K cited in the article. She pays for those expenses out of cash flow (SS, annuities), so her net worth does not have to be huge to allow her to spend that kind of money over the next couple of decades.

 

[nun]

I don't really know enough about Medicare to comment, but I thought most people who had Medicare purchased a supplemental policy through an insurance company. A lady here at work turned 65 last year and she told me that she signed up for Medicare coverage and bought a supplement thru BC/BS.

The cost of basic medicare is around $100/month and then you have to but a supplemental plan......I'm not sure how much that costs, it's devilishly complicated and as much as I look i can't get good numbers. But this supplemental plans also have maxes and co-pays, so if you have to have anything outside of basic medicare and need a lot of drugs your costs can mount up.

maybe a single person pays $300 in insurance a month. If they live for 30 years and at a conservative 5% annual inflation over 30 years they would spend $239k just on insurance premiums.

 

[MichaelB]

This is from the Fidelity website The Increasing Cost of Healthcare Upon Retirement

Of the $240K, almost $80K is just medicare premiums. That amount of money could be spent but I think it is a bit of fido-fearmongering.

 

[wanderer69]

I linked to this article a few days ago in a long thread on retiring abroad.

http://www.early-retirement.org/for...-the-us-more-rhetoric-than-reality-61137.html

My apologies wakinwood. didn't mean to step on your link!

 

[Alan]

My apologies wakinwood. didn't mean to step on your link!

sounds painful

 

[Buckeye]

I know next to nothing on Medicare. Expats here in their 70's tell me that once every year they fly to the USA and walk into the emergency room complaining of Dizziness or chest pains then stay for a week or two getting every kind of test known to man done on them and it is paid for by medicare.

I do hope they are kidding. What a waste of resources. How selfish if it is true. Just schedule a checkup.

 

[ShokWaveRider]

I do not think it is lack of money, as those without are really no better off abroad (unless they are a citizen of the target country)

I think it is the idea that their hard earned retirement stash can perhaps go further, and a single payer medical system that is affordable. (At least for us it would be)

 

[nun]

I do not think it is lack of money, as those without are really no better off abroad (unless they are a citizen of the target country)

I think it is the idea that their hard earned retirement stash can perhaps go further, and a single payer medical system that is affordable. (At least for us it would be)

Many people retire abroad, but don't become residents of the foreign country as a tax strategy, however, that might also mean that they would not qualify for public or single payer health care. However, as local private healthcare is usually far less expensive than in the US they just pay out of pocket. If you were to retire to somewhere like Canada or the EU being a resident is usually sufficient for you to qualify for the single payer, public or public/private combos of health insurance available.

 

[Chuckanut]

I know next to nothing on Medicare. Expats here in their 70's tell me that once every year they fly to the USA and walk into the emergency room complaining of Dizziness or chest pains then stay for a week or two getting every kind of test known to man done on them and it is paid for by medicare.

A classic example of why we need to reform the way we pay for and provide medical care in this country.

 

[Chuckanut]

Consider that many people may retire outside the USA as a lifestyle choice. Some people like the cafe culture, the public spaces filled with people, engery and entertainment, modern public transportation systems, etc.

Money may or may not be an issue. Retiring in France or England is going to cost quite a bit. On the other hand my British friend who retired to an Eastern European country says "I came for the cost of living, and stayed for the women." Having been to that country, I have to agree about both.

 

[nun]

Money may or may not be an issue. Retiring in France or England is going to cost quite a bit. On the other hand my British friend who retired to an Eastern European country says "I came for the cost of living, and stayed for the women." Having been to that country, I have to agree about both.

It will be very difficult for a US citizen to retire to the UK as the old retirement visa is not available. Even then you had to show a "close connection" to the UK. So unless you have a UK relative, spouse etc or are able to get a residence visa in another EU country retiring to the UK will be hard.

 

[kevink]

The Kaderlis have a great interview with a guy ER'd on what sounds like a very modest pension who's living well and adventurously for ~$500-700 a month:

Chris Smith Interview

We know several couples here in Mexico who are living well on $1500-2000 a month total in relatively expensive enclaves like San Miguel de Allende and Lake Chapala. Many if not most describe themselves as in part "health care refugees." Most still pay their Medicare premiums once they hit 65, but often only so as to have some sort of coverage on return visits to the U.S. (virtually all short-term travel insurance stops paying at 65 or 67).

 

[haha]

The Kaderlis have a great interview with a guy ER'd on what sounds like a very modest pension who's living well and adventurously for ~$500-700 a month:

Chris Smith Interview

Inteersting that he apparently prefers his cigars with the cellophane on.

Ha

 

[pasttense]

"A 65-year-old couple retiring in 2012 is estimated to need $240,000 to cover out-of-pocket medical expenses" Some of you seemed to have missed a basic point: A couple is two people, so that is $120,000 per person.

 

[kevink]

"A 65-year-old couple retiring in 2012 is estimated to need $240,000 to cover out-of-pocket medical expenses" Some of you seemed to have missed a basic point: A couple is two people, so that is $120,000 per person.

Meaning, according to the "Average Net Worth of Americans by Age" thread just above this one, that an average 65 year old couple need only allocate half of their net worth (including real estate value) to out-of-pocket medical expenses. That's a uniquely American type of insanity for sure.