Kitces on HC (both for FIRE and post-65)

[WyomingLife]

All: Again, a privilege to be here.

The following Kitces analysis spoke to me and was persuasive: https://www.kitces.com/blog/vanguar...ail&utm_term=0_4c81298299-9e7eb37158-57276529

I'm a new Kitces reader, and remain a HC planning novice, despite all the help here (for which I remain indebted).

Thoughts on the above?

 

[joeea]

I would expect that fewer people worry about healthcare once reaching Medicare age.

It's the early retirement crowd (ie, this site's audience) that should be worrying most. I read today that the Senate may decide to revisit the whole "repeal the ACA" depending on how the mid-terms go: https://www.cnbc.com/2018/10/17/mcc...publicans-might-revisit-obamacare-repeal.html

So for the FIRE crowd, the future of healthcare is far less certain.

I do agree with Kitces that looking at future healthcare costs as a lump sum is silly, and makes it seem scarier that it need be. And I agree with his comments about the appeal of long term care insurance.

 

[walkinwood]

Another great post from Kitces that's worth reading in its entirety. No scare tactics here, but a reasoned analysis of the expenses you're likely to face before & after medicare.



Medical expenses post-retirement are not paid in a one time lump-sum the day after you retire, but are an annual expense that's lower than other expenses that you already plan for like food & shelter. Duh! But that's exactly the kind of scary headlines we've been reading.



He makes a point to separate LTC expenses which can be non-existent (48% of people) or less than $100,000 (for another 25%) of people, but which can ruin a retirement nonetheless.


Kitces also takes into account studies that show that total expenses fall as one ages even while medical expenses increase.

 

[USGrant1962]

He makes and important point. Both the press and financial companies like Vanguard and Fidelity love to say medical costs will total $low-six-digits per person in retirement. For example, Fido says ~$280K/pp.

While true in an aggregate sense, no one looks at food/clothing/shelter as a lump sum cost in retirement. Yet for most those are much higher than medical. Then he points out if you are going to look at medical as lump sum, you should look at SS (and pensions IMO) as a lump sum too, worth $mid-six-digits for most.

This concept is important for people planning ER. If they look at health care as some monstrous lump sum rather than a routine recurring expense, they may work too long and waste time working. Time > money.

 

[bmcgonig]

What accounts for the over $5500 difference between the median case with Plan F and the worst case with Plan F? Is it the drug cost? Doesn't Plan F cover everything else?

 

[clifp]

Another great post from Kitces that's worth reading in its entirety. No scare tactics here, but a reasoned analysis of the expenses you're likely to face before & after medicare.



Medical expenses post-retirement are not paid in a one time lump-sum the day after you retire, but are an annual expense that's lower than other expenses that you already plan for like food & shelter. Duh! But that's exactly the kind of scary headlines we've been reading.



He makes a point to separate LTC expenses which can be non-existent (48% of people) or less than $100,000 (for another 25%) of people, but which can ruin a retirement nonetheless.


Kitces also takes into account studies that show that total expenses fall as one ages even while medical expenses increase.

Very good article. Still I'd be a little cautious of the 48% of the people don't need long-term care. I suspect that the number of folks who could benefit from long-term care is much higher than 50%. The problem is either assisted living, in home health care, is so expensive that many people muddle by taking care of their parents, either by having them move in with them, or devoting many many hours to their care.

Since it is virtually universal opinion that parents don't want to be a "burden to their children". I think when planning health care cost in retirement that a couple years in a nursing home/or 40-80/hours a week of in-home health care should be in your plan