Insurance as a % of Retirement Budget

[REWahoo]

With the recent discussion of auto insurance, health insurance and LTC insurance on the board, just what percent of everyone's retirement budget is consumed by insurance premiums? This is a huge portion of my budget - I'm currently running about 22%.

If you haven't yet retired, please do not respond to the poll so you can see what to expect when you cross the Rubicon youself...

REW

 

[Newell]

Medical = 2.2% (Subsidized)
Dental = 1.3% (Subsidized)
Auto = 1.6% (2 cars)
Homeowners = 0.6% (Condo)

 

[Nords]

With the recent discussion of auto insurance, health insurance and LTC insurance on the board, just what percent of everyone's retirement budget is consumed by insurance premiums?  This is a huge portion of my budget - I'm currently running about 22%.

If you haven't yet retired, please do not respond to the poll so you can see what to expect when you cross the Rubicon youself...

REW

$750  Two cars & two retired Hawaii drivers with USAA.  No collision/comp.
$600  Home with Armed Forces Insurance.  2% hurricane & $5000 deductibles.
$500  "Named perils" on rental property with AFI.  Same high deductibles.
$450  Personal property & liability.  I think liability is about $300.  

AFI perpetually whines that our personal property is underinsured but we have replacement value coverage and pretty low standards.  Much of our stuff was bought overseas when we were junior officers, or from local garage sales.  

Every year I compare AFI with USAA and spend hours trying to reduce everyone's little differences to actual dollars.  AFI wins by a few bucks every time (and service wins by several lengths) so I think they pay attention to USAA's pricing.  OTOH AFI has lost a lot of money the last few years (especially on Florida property) and they're starting to jack up the premiums.  I think they'll survive (they're over 100 years old) but I bet USAA & Berkshire Hathaway are keeping an eye on pack laggards like this.

REW, it's interesting that you use the "Rubicon" phrase.  I just finished Tom Holland's book and I appreciate the ER analogy of starting a world war by having your loyal troops escort you back to your homeland after years overseas...

 

[kz]

16.2% health insurance
1.2% car insurance (2 cars)
0.6% home insurance (1 mil liability)

 

[REWahoo]

REW, it's interesting that you use the "Rubicon" phrase. I just finished Tom Holland's book and I appreciate the ER analogy of starting a world war by having your loyal troops escort you back to your homeland after years overseas...

My thinking was once you retire you may need an army to fight the insurance premium battle. In my particular case it is primarly health insurance, which drains slightly over 15% of my annual budget. And when I exhaust Cobra late next year, the percentage will almost certainly increase...

REW

 

[uncledrz]

I haven't yet retired, so according to the poll I could not and therefore did not vote.

OTOH, I have budgeted 25% of planned retirement income to insurance, mainly medical. It's a long time till social security, and an even longer time till medicare, and medical/insurance cost will most certainly increase at a greater rate than general inflation.

 

[MJ]

I never thought about my insurance in terms of %. Here are my numbers for single adult,

Health Ins 14.3% (medical dental, miracle this year, didn't go up)
LTC 2.9%
Auto Ins 2% (1 car, no comp, no collision)
Home Ins 2.8%
Liability Ins 0.6% (1mil)

Total 20.6%

Sure is a lot of money to keep yourself protected. I hope to lower most of these when I finally move to a lower costing state.

 

[Martha]

Not fully retired yet so can't vote.

I am estimating about 30% after I ER, mostly for health insurance.

 

[shiny]

This is all a bit depressing to me.

So, the percentage budgeted, is that for the premiums ONLY? Or is it for HSA, paying deductibles, etc.

 

[REWahoo]

This is all a bit depressing to me.

So, the percentage budgeted, is that for the premiums ONLY? Or is it for HSA, paying deductibles, etc.

Premiums only. And yes, it is a bit of a downer...

REW

 

[retire@40]

Although health insurance keeps going up every year, at some point it will reach a maximum before the entire health care system collapses upon itself. When will that happen? I don't know.

I will continue to use a 10% yearly inflation factor in my health insurance budget, but at some point, I will either have to keep changing to higher and higher-deductible plans, cut my standard of living, work more, and/or decide to drop health insurance altogether.

 

[REWahoo]

Only 16 have responded to the poll so far, but it appears that insurance premiums are running more than 15% of the average retirement budget.

REW

 

[JohnP]

Health Ins    3.2% (medical premium only Family plan- no dental cov other than emergency)
LTC              2.5% (2 people)
Auto Ins       1.0% (2 cars, comp & collision)
Home Ins      0.5% (partial - structure, etc covered by condo fees)
Pers Life Ins  1.4% (don't really know why any more)

Total             8.6%

JohnP

 

[SteveL]

This is one area where the percentage of monthly income isn't as important (IMHO) as the dollars. In four years of retirement, my employer subsidized health insurance has increased from $2400 to $8000 per year and I expect another significant increase for next year. The home, auto, and umbrella haven't changed from pre-retirement days.
I don't think it is possible to plan what might happen to health insurance costs. I have 6 more years before Medicare, and by then I expect a good quality suppliment policy to cost over $6000, so that with the cost of Medicare, Health insurace will cost in the $10,000 per year range. I wouldn't be surprised to see costs 20% higher either...

What bigger problem affects ER'ers, and the elderly?

 

[REWahoo]

So far the poll shows 55% are paying less than 10% of their annual retirement budget for insurance premiums. OTOH, 27% report they are spending more than 20% on insurance. Ouch...

REW