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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75340  
Subject: Re: t.Retirement won't happen for me Date: 8/18/2006 11:39 AM
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As a preface, I am also a self-employed professional. I have a practice with a couple of employees. I know the problems you face, as I face them as well. Shoot, I even have a son with cerebral palsy. So I know where you are coming from.

However, you've got some serious errors in what you've said. My practice is in accounting - I'm a CPA. So not only do I know where you are from a business perspective, I know the tax laws as well.

Now, to a few specifics.

Small business owners are not allowed to deduct their own healthcare.

That is just wrong. You may deduct 100% of your health insurance. The balance of your personal medical expenses are at least itemized deductions. And if your practice is organized as a C corporation, you can deduct your other medical expenses in the corporation as well. To do that, however, you need to provide a plan to pay for your employees' co-pays and deductibles as well. That may or may not be a worthwhile trade-off - you'd have to run some numbers to make that decision.

I ... offer retirement accounts, flex accounts, continuing education and disability insurance but I am not allowed to have many of those benefits.

Again, that is just wrong. The main barrier to the business owner deducting most of these benefits is that you also have to provide them to your employees. If you're already providing them to your employees, you can deduct them for yourself as well. Your continuing education is deductible no matter what you do for your employees in that regard. I don't recommend deducting the disability insurance. Doing that causes any benefits to be taxable. If you pay for that insurance personally, any benefits you collect are tax-free.

I was able to get an HSA Blue Cross plan last year at great expense. At 56 years old, they could cancel me at any time for any reason.

I checked quickly and see that the AVMA (American Veterinary Medical Association) offers a wide array of insurance products to their members. I didn't look at the details, but I'd guess their health insurance is reasonably affordable, as it's probably a group plan for all of the vets that choose to participate. And you also likely can't be singled out for cancellation. Plans available through associations like this tend to be reasonably good plans. At a minimum, I'd look into it. Your state association might also have insurance plans available to you.

I will never be able to retire unless healthcare becomes reasonably affordable.

At a bare minimum, you'll qualify for Medicare in another 10 years or so. It is very affordable, can't be cancelled, and at least provides a saftey net level of coverage. It isn't the greatest thing, but it's better than nothing.

I'm not asking for sympathy, just the realization that not everyone has choices like you are discussing.

Agreed. Sometimes folks here are happily discussing how to plan for retirement when they live well below some very significant means. That really makes things easy.

But that doesn't mean you have to roll over and give up. You take whatever means you have available to you, and find a way to tuck some of that away for retirement. Let's take a look at your situation, even without any numbers.

You have a professional license. That is a good leg up. You can always work for someone somewhere with that license.

You have your own business. That gives you almost unlimited potential. What you do with that opportunity is up to you. As a small business owner myself, I find that the hardest thing to do is let my employees do thing that I know I can do better or faster. But it's vital that I let go and let them do it. I only have a limited number of hours available. 24 per day. If I spend those doing the work, I've limited my income. But if my employees are doing the work and I concentrate on monitoring their work and bringing in new business, I can do as much work as I can find employees to do it for me. And lest you think I've mastered that, I most certainly have not. My business is not yet thriving. I haven't taken any money out of the business for 2 months.

On the business front, it is also an asset that you can have available to you. You mentioned that you're paying back a loan you needed to buy the practice. In the same way, you can also sell your practice down the road and have a bit shot in the arm of cash. Yes, some of it will be needed to pay off the remaining loan. But the rest will be yours (after Uncle Sam takes his cut). So you are building a valuable asset with your practice. And to make that practice more valuable, you need to have staff in place that does most of the work for you. That way a new owner can step in and take over with minimal disruption to the practice.

Congress needs to develop a workable healthcare system for those of us not employed by the federal governement.

If you want to talk politics - what Congress needs to do is fix our tort laws. If you think your insurance is bad, talk to your doctor colleagues who work on people. Their malpractice insurance will make your head spin. I've seen premiums of $100k or $200k PER YEAR. How'd you like to have that nut behind your business? And why is that so expensive? Because we've got lawyers coming out of our ears who will sue anyone for anything at the drop of a hat. It's become a lawsuit lottery out there. And malpractice insurers aren't making it easier on us. They just roll over and settle pretty much all but the most friviolous claims. Its cheaper than fighting the claim and running the risk of losing. We need a cap on pain and suffering damages so that insurers are willing to go to court and try cases on their merits instead of just settling. And we need a significant penalty against those who bring friviolous lawsuits - both the plaintiffs AND their attorneys. If the attorney is going to share in the benefits of the suit - and they always do in these cases - they should also bear the risks of being determined friviolous.

Of course, this isn't going to happen any time soon. Almost every member of Congress is an attorney. And the ABA has some significant clout in Congress. A return to the citizen-legislator of the 1800's might help. Someone who was willing to put their real career on hold for a couple of years while they served in Congress. Ok - so a guy can dream, can't he?

--Peter
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