Insurance Increases

[ziggy29]

I think you are focusing on health care insurance rates. The OP's question concerned the increase of ALL insurance.

Indeed. I think awful yields on savings and fixed income is a significant reason for it. Insurance companies make much of their money on the "float" they hold (premiums collected but not yet paid out in claims). When interest rates are near zero, they can make very little profit on "float" and thus have to get it somewhere else -- premium increases.

 

[Koolau]

Confusion in FIRE planning: How does anyone planning FIRE deal with the annual increases in Health, Auto and Home Insurance. What number do you use to project? Premiums for Health Insurance rose 18% Home Insurance 15% Auto Insurance 10%.....the numbers are all over the place. They certainly aren't tied to the CPI. How does Firecalc account for these wild increases if they assume increases based on some markedly smaller number like 3% inflation rate. Most of us don't have COLA driven pensions / health plans, so what do most folks do to project ahead or do some folks just drop the insurances all together and just pray for no bad outcomes.

I more or less used FIRECALC and other calculators to plan my retirement needs (stash-wise) but included back-ups in the plan. Some back-ups included not retiring before I could retire on a lower draw than calculated. IOW, we all know the 4% rule. Good for planning - maybe not always good for execution. If FIRECALC says 4% (using CPI or whatever estimate of inflation) then maybe wait until you can live on 3 or 3.5%.

Another back up is to play the "game" for the outliers. Insurance is one of the big outliers, recently. (So is fuel.) Play the game by switching insurance companies (if that's practical) or changing coverage and deductible, etc. It's not a total fix, but it can delay until we do fix things.

Other back-ups include flexibility in spending in other (more stable?) areas. One of ours is eating out. We do it often, but could easily cut back. That was built into our plan. Cars are another place we could cut (e.g., sell one car - talk about cutting insurance costs!! ).

If none of these are possibilities, it may be necessary to conclude that you are not really FI enough to RE. Not what one wants to hear, obviously, but it may be true. I think Nords called it "thinly capitalized" retirement.

Finally, I think it's clear that SOMETHING will be done to begin to stabilize HC costs (probably the most important insurance issue you face). We won't all like what the "fix" is, but something has to be done. 20% increases into the foreseeable future can't continue or we will eventually have only one budget item. Since that can't happen, it won't.

So I guess I would suggest you use your best judgement in FIRE planning but also plan to be flexible when you actually retire. (Best of luck!)

 

[kevink]

I think the problem with living outside the USA is when you are at an advanced age and frail - take a walk through a retirement home with people 80+ years old.

Are you plans to remain in Mexico at that stage?

Actually that's the very best part about the care that's available here at Lake Chapala. There are numerous assisted living and similar facilities where one can get whatever level of care is needed, excellent food and be in one of the world's greatest climates for $1200-1600 a month at the top end.

Alternatively, it's very easy to age in place in one's home and hire a part or full-time helper for $3-4 an hour. Mexico is extremely family-oriented and the elderly are respected. Year-round fresh fruit and produce, highs in the 70's and 80's and lows around 50 year-round and $15 doctor visits and dental cleanings are truly a different world than being stuck in some awful nursing home up north staffed by people getting paid nothing with high turnover.

 

[dex]

Actually that's the very best part about the care that's available here at Lake Chapala. There are numerous assisted living and similar facilities where one can get whatever level of care is needed, excellent food and be in one of the world's greatest climates for $1200-1600 a month at the top end.

Alternatively, it's very easy to age in place in one's home and hire a part or full-time helper for $3-4 an hour. Mexico is extremely family-oriented and the elderly are respected. Year-round fresh fruit and produce, highs in the 70's and 80's and lows around 50 year-round and $15 doctor visits and dental cleanings are truly a different world than being stuck in some awful nursing home up north staffed by people getting paid nothing with high turnover.

Good to hear; I always like to have options.

I think my check out time is 85 so I have some time. I'm going have to check out Lake Chapala.

 

[FIRE'd@51]

I haven't researched this. But does it really go down when you consider the supplemental ins you need to buy for part B(? or whichever letter it is) and for drugs. My mother 92 pays 170/mo for the supplemental plus the medicare premium (I don't know the number - maybe she is on medicaid, I don't remember).
170 - 2 supplimental policies
254 from the web site
96 part B
520 total
That 520/mo. is a good policy for a private ins. policy today.

Check the numbers - I'm not sure if I got it right.


https://questions.medicare.gov/app/answers/detail/a_id/2260/~/medicare-premiums-and-coinsurance-rates-for-2010

I have ten years to go until 65. Again, without doing/knowing the numbers my guess is that my age 65 costs will be close to my age 64 costs. After that I'm guessing by the time I'm 70 we will have a single payer system. My costs will then go down or be pretty flat as I dump the costs on the younger generation that is still working.

Maybe others can contribute with their experience.

From your link:

Most people do not pay a monthly Part A premium because they or a spouse has 40 or more quarters of Medicare-covered employment.

Subtract the $254 from your mother's premium and it would be $266 per month, and this likely gives her close to 100% coverage (depending on which supplemental she has chosen), other than a copay for drugs.