Retirees need $1 million for health care alone

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WiseNLucky
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Retirees need $1 million for health care alone

Post by WiseNLucky »

Greetings everyone:

Get ready to grip your chest for this one:
Many Americans at or near retirement age would require more than $1 million to prefund medical costs over their remaining life, according to new research from the Employee Benefit Research Institute (EBRI). The highest costs face the majority of future retirees—more than two-thirds—who receive no health insurance from their former employer to supplement Medicare. Such employer-provided health coverage for retirees is increasingly rare.
http://www.ebri.org/prrel/pr622.htm

As JWR would say, have fun. :shock:
WiseNLucky

I just wish everyone could step back and get less car and less house then they want, and realize they don't NEED more. -- NeuroFool
wanderer
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Post by wanderer »

whenever I see something as astoundingly unattainable as this, I wonder what some of the folks who firmly oppose overseas retirement would do were they not as 'well-to-do'.

We hit on the overseas gambit because we stumbled into this thing and because, by 1999 I was well done in the burnt out department and desperate to get out. Once I found I kind of enjoyed things overseas, the startlingly low cost of many services - esp. medical care - sealed the deal.

anyway, it's one f'd up mess, Stateside, IMO. different strokes (no pun intended)....
regards,

wanderer

The field has eyes / the wood has ears / I will see / be silent and hear
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ben
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Post by ben »

Good point Wanderer! If the article is right then it will for most US citizens (without company paid insurance/Cobra or whatever - and no $1mill just standing around waiting to pay medical bills) no longer be a question whether they WOULD LIKE to go abroad - but they are simply FORCED to go....

www.goodhealthworldwide.com will probably be pleased to receive the many new clients - check online what it will cost you. The rest of the $1mill you can then use on fast cars, women and rock+roll! :D

Reminds me a bit about my decision as to not moving back (full time - half year is OK) to my Scandinavien home country - as my target $1mill nest egg w/r of say $50k pr. year (optimist!) would be taxed and cut in half before I see the remaining $25K. The $25k I say good bye to can buy me many airplane tickets to go home/hotel stays at home(or buy summer house/health insurance abroad Etc.
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ataloss
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Post by ataloss »

I like the goodhealth link

interesting when I add us coverage to Thailand it more than doubles the cost!
Have fun.

Ataloss
therealchips
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Post by therealchips »

The new report concludes that a 65-year old retiree without employment-based insurance may require up to nearly $1.5 million to prefund lifetime medical expenses (assuming death at age 100 and medical inflation of 14 percent annually).


What does medical inflation of 14% annually for 35 years mean? 1.14 to the 35th power is around 98. If the economy grows by about 4% for those 35 years, GNP will be about four times as large then as now. Medical care currently accounts for about 14% of the American Gross National Product. If medical care consumes 14% of today's GNP, and then grows by a factor of 98, it will consume 1372% of today's GNP, or 343% of quadrupled GNP 35 years from now, leaving us nothing for any other need. In short, the reported analysis is worthless.

Do you think it likely that you will live to age 100 or that medical inflation will continue at such a high rate? Aren't cost control measures such as tort reform or enforcing immigration law more likely?
A man who retired at 65 and died at 80 would need $47,000 with employment-based insurance and $116,000 without it (assuming 7 percent inflation). The disparity between the two figures in each case largely reflects reimbursement for prescription drug costs included in work-based plans. Today the average 65-year-old male lives to age 80.8 and the average female to age 84.
"Disparity" the man calls it. The ratio of $1.5 million to $116,000 is a factor of about 13.
He who has lived obscurely and quietly has lived well. [Latin: Bene qui latuit, bene vixit.]

Chips
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ataloss
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Post by ataloss »

In short, the reported analysis is worthless.
so the us won't be abandoned as we all move overseas seeking cheaper health care? :)
Have fun.

Ataloss
therealchips
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Post by therealchips »

Last I heard, the US takes more than half of the immigrants, worldwide, that migrate from one country to another. Some gradual depopulation of the US seems very attractive by comparison.

"Someone" emailed my previous post to one of the study's authors, without softening its tone. In the (doubtful?) event that the author responds to a tactless email, "someone" might post that answer here. EBRI's site claims
“EBRI provides credible, reliable, and objective research, data, and analysis.”
which is preposterous, based on what we have seen.

A meditation on the idea of 35 years of 14% annual medical cost inflation:
Herbert Stein, who died recently at 83, was not just another economist. He had become a preeminent social commentator, able to capture large truths almost off-handedly. He once attributed America's economic success, for example to the fact that "100 million people get up every morning to do the best they could for themselves and their children." This was vintage Stein, not just a pithy phrase but a penetrating insight. The (American) system flourishes because its basic beliefs -- usually take for granted -- encourage people to strive. . . . Always he wrote with clarity and humor. Typical was his explanation of why projecting trends into the future often goes awry: "If something cannot continue forever, it will stop."
He who has lived obscurely and quietly has lived well. [Latin: Bene qui latuit, bene vixit.]

Chips
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ataloss
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Post by ataloss »

"If something cannot continue forever, it will stop."
when it stops I think retirees with a large nest egg will be better off than those who have fewer resources
Have fun.

Ataloss
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ben
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Post by ben »

Ataloss; while not crystal clear on www/goodhealthworldwide.com web site even the basic cover (the cheapest - forgot what they call it - major medical or something) covers USA emergency treatment and related in-patient treatment. I.e. you will be covered for accidents/serious illness arriving/ happening when in the USA.

The major medical (I.e. the cheapest of them all) also includes evacuation - where Singapore would be the typical Asien country to go to (also the one they use for an Asian evacuation example in their brochure), with world class medical service.

If living in Thailand (hey! that is MY FIRE-base! 8) ) I would NEVER want to be evacuated to my Scandinavien home country. First of all; medical standard much better in Singapore - probably better than USA too, and 2nd if was a major accident I want my travel to be short rather than long.

Just put in my data again: 34/Asia based/inpatient+evacuation(major medical)/$1000 deductable that becomes $ 566/year I.e. $ 47/mth.

I then made myself 10 years older (sometimes I FEEL that... :lol: ) I.e. 44:
$ 716/year

and 20 years older (54): $1148/year

and 30 years older(64): $1983/year
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[KenM]
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Post by [KenM] »

I still haven't looked at overseas medical insurance for retiring in low cost areas in complete detail but most of the affordable policies for long term retirement are based on immediate in-patient treatment - OK for a quick triple bypass or whatever but possibly not much good for a kidney transplant - and no solution for expensive long term out-patient requirements such as kidney dialysis, psychiatric treatment, life-time expensive drugs etc. If you have to fund out-patient treatment then it may well turn out to be better to also fund in-patient directly in low cost areas instead of paying the insurance premium.

A comment I've always thought of making (as a non-resident alien - I really like the "alien" word :) ) on US medical costs is whether the high costs are really due to litigation etc or whether it is because Americans demand instant, very high quality, spare-no-expense on trying every possible option even with very low probability of success. Other countries perhaps have lower costs due to "rationing" resulting from waiting lists for treatment, "rationing" expensive drugs to cases with a high probability of success and a more phlegmatic attitude to accepting death and disease.

Which brings me to a question that interests me - obviously very large numbers of Americans at present do not have the funds and presumably increasingly will never have the funds to access US-style medical care. What do they do now if they have a major illness and what will they do in future??? ........ presumably medical care is "rationed" as in most other places in the world ....... it's just more obvious in the US that it depends how rich you are ........ which I suppose applies to everything ... houses, cars, education ...... why should medical care be any different?????? .... or am I too cynical :?
KenM
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BenSolar
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Post by BenSolar »

"If something cannot continue forever, it will stop."
I am just not confident that it will stop before I do. :?
"Do not spoil what you have by desiring what you have not; remember that what you now have was once among the things only hoped for." - Epicurus
[KenM]
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Post by [KenM] »

sawadee ben
Reminds me a bit about my decision as to not moving back (full time - half year is OK) to my Scandinavien home country
Can you really return to your home country for 6 months each year? As a Brit it can be 6 months in one year but no more than an average of 90 days a year over a 4 year period - I've never got anywhere near that in the past but there may be a stage when I have to do the calculations carefully if I want to avoid UK income tax.
KenM
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therealchips
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Post by therealchips »

Here is the answer that someone got from one of the authors cited above:
You raise a good question, but I wonder whether you do so at the cost of ignoring a more important one.

It is certainly implausible to imagine a future where a 65-year-old will live 35 more years, each of which records medical inflation of 14%. My personal view is that double-digit increases in anything are unlikely to continue for more than 3-5 years. The facts are that we've seen medical inflation of this magnitude and it may be occurring at the moment, although we've not seen it continue for decades. Similarly, most people won't live to reach their hundredth birthday.

Nonetheless, both are possible, particularly the latter. And while you can bet on the averages, you run the risk of those who are now watching their 401(k) accounts dwindle despite projected annual stock market appreciation of about 7% annually.

The real issue is that retirees face substantial medical costs over the remainder of their lives and often are not prepared for them. The numbers you cite are an extreme case, but the logic holds with smaller numbers as well.

Sorry if you disagree with our use of the word disparity. Perhaps we could have made you happier by calling it a major disparity.

Thanks for reading our materials. I do hope you find them helpful despite the imperfections you believe you've found.
I observe that the response was timely and more tactful than the stimulus. I object to the assertion: you run the risk of those who are now watching their 401(k) accounts dwindle despite projected annual stock market appreciation of about 7% annually. (For now, I'll just ignore the vigorous rally we've seen in the last twelve months, as the author did. My IRA is up about 18% in that period, with no deposits and no withdrawals.) If people making those 7% projections were careful at all, they made clear that the 7% is only a long term average, that there has been great variability in the return, that that variability is highly significant, and that the future long-term average returns could be less than the historical average. People ignored those warnings at their own peril. I give him credit for quoting the real return of 7% rather than the nominal return over 10%. I also object to his implication, restated in the response, that double-digit real increases in any significant sector can persist for decades since, as I pointed out originally, that sector would grow to consume all of GNP when real annual GNP growth is in the single digits.

I agree with the assertion "The real issue is that retirees face substantial medical costs over the remainder of their lives and often are not prepared for them". The original article used a scare headline to attract attention, using assumptions that the author now calls "implausible".
He who has lived obscurely and quietly has lived well. [Latin: Bene qui latuit, bene vixit.]

Chips
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ben
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Post by ben »

Sawadi cap Ken,
goodhealth would cover a kidney transplant - does not have to be a "rush to hospital" situation. Their homepage also mentions it covers out-patient related to in-patient treatment but whether that would be for life I don't know - but have asked them.

Above only relevant as I am looking at the cheapest major medical version - pick the next level and all will be covered.

As for tax rules in my home country it is: 3 months at a time max 6 months/year. I.e. would in theory have to pop over the bridge to Germany during the 6 months but in reality there is no real data entry as when I enter/leave the country even when arriving from Asia. Nobody would be calling me after 6 months and 1 day.
Normal; to put on clothes bought for work, go to work in car bought to get to work needed to pay for the clothes, the car and the home left empty all day in order to afford to live in it...
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ataloss
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Post by ataloss »

I liked the link. I can get coverage for a family of 4 for $2500 in a number of countries. I didn't read the fine print (since I am not jumping at the chance to move)

chips, I agree that something has to change wrt the medical inflation rate. ES is disappointed that average net worth isn't higher. The way I look at it, prosperous early retirees are a less likely target of additional taxes if there aren't too many of us. :) Probably things will work out fine. Certainly having higher new worth is going to be better than the alternative :) (and I am trying to learn Spanish just in case)
Have fun.

Ataloss
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Post by Cut-Throat »

Get ready to grip your chest for this one:


I have some more bad news! -


In the end - we're all dead :shock:
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ben
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Post by ben »

Ataloss; good point on "the fewer FIRE people the better" - and right now only 0.1% of the planet has $1mill in assets (not incl. own housing).

So maybe I should stop spreading the gospel!? :wink:

On the other hand; if too many sit around with nothing when closing to retirement they will have to pump the rest of us for all we've got... Now where was those details on the Panama offshore broker again...?
Normal; to put on clothes bought for work, go to work in car bought to get to work needed to pay for the clothes, the car and the home left empty all day in order to afford to live in it...
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