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Author: math999man Big red star, 1000 posts Old School Fool Global Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75375  
Subject: retirement medical expenses Date: 4/23/2002 7:04 PM
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I just received a notice from my employer telling me that I will not qualify for payment of medical expenses when I retire. Receiving this paper was odd, since none of the people in our department were close to retirement. But it did make us start thinking -- by the time I retire (in 20 years or so ), my medical expenses will be thousands per month !


So - allow me to present this opinion - it is no use saving for retirement, you can max out the 401k and IRA and other savings, BUT when you retire and have the 2+ million dollars, it will ALL be taken by the medical expenses each month in just a few years.

You will have to go to SS and ask for assistance. They will preach to you that yhou should have saved when you were working. Too bad they will say. When in reality, you saved to the max, forgoing beter house, car, education, etc...

am I way off track - but it looks like in 20+ years - the medical expenses will eat ALL your retirement savings -


Comments welcome.
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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: 34326 of 75375
Subject: Re: retirement medical expenses Date: 4/23/2002 7:36 PM
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by the time I retire (in 20 years or so ), my medical expenses will be thousands per month !

Why do you think your medical expenses will be "thousands per month"?

Do you have some medical condition? If so, you will need to do some special planning to take care of that situation in retirement. It could even include changing jobs to one that will include medical insurance in retirement, or setting aside extra funds to cover your special situation.

Are you simply projecting current medical expense inflation out for the next 20 years? If so, I suspect you are being a bit too conservative. Medical inflation can continue at it's accelerated pace for a few more years, but things will just plain blow up if it continues unabated for the next 20 years. My guesses in that situation would include socialized medicine (a la Canada or parts of Europe), severely limited insurance coverage, or (gasp!!) price controls.

Just my thoughts on the matter.

--Peter

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Author: math999man Big red star, 1000 posts Old School Fool Global Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34327 of 75375
Subject: Re: retirement medical expenses Date: 4/23/2002 9:43 PM
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my mother has a friend that spend $300 / month for insurance (a low amount for todays seniors) - at 20% increase / year after 20 years, the monthly rate is $11,000. granted, 20% is a LOT but even if 1/2 that - the monthly cost will be $2,000.

I have no special medical condition. The notice my employeer passed out was to the whole company - not just me. I am a senior project engineer - a professional position - 45 years old, with 20 years experience. So - I would have expected some reasonable coverage by my employer after a total of 30 years of service when I retire.

The reason I am posting this experience is to let others know not to take it for granted that medical expenses will be covered by your employer. All companies are reducing cost and what better costs to cut back on then costs associated with future retired workers - they will not be a concern in 20 years to the present management.

Several people at work that are close to retirement (5-7 years) are thinking of becoming Canadian citizens for the socialized medical coverage.

I think a lot of the present day workers are in for a big surprise when they retire.



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Author: intercst Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34328 of 75375
Subject: Re: retirement medical expenses Date: 4/23/2002 10:04 PM
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math999man writes,

my mother has a friend that spend $300 / month for insurance (a low amount for todays seniors) - at 20% increase / year after 20 years, the monthly rate is $11,000. granted, 20% is a LOT but even if 1/2 that - the monthly cost will be $2,000.

I have no special medical condition. The notice my employeer passed out was to the whole company - not just me. I am a senior project engineer - a professional position - 45 years old, with 20 years experience. So - I would have expected some reasonable coverage by my employer after a total of 30 years of service when I retire.

The reason I am posting this experience is to let others know not to take it for granted that medical expenses will be covered by your employer. All companies are reducing cost and what better costs to cut back on then costs associated with future retired workers - they will not be a concern in 20 years to the present management.

Several people at work that are close to retirement (5-7 years) are thinking of becoming Canadian citizens for the socialized medical coverage.

I think a lot of the present day workers are in for a big surprise when they retire.


I agree.

I retired in 1994 at age 38 after working 17 years as an Engineer. I'm planning on arranging my finances so that I have $100,000 per year available for health insurance when I'm 65. (I'm paying $4,000 this year at age 46.)

However, I suspect we won't get to the point where the average person is paying $100,000 per year for health insurance. There'll be some kind of revolution long before that happens.

intercst

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Author: galeno Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34332 of 75375
Subject: Re: retirement medical expenses Date: 4/24/2002 11:17 AM
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intercst wrote:
I retired in 1994 at age 38 after working 17 years as an Engineer. I'm planning on arranging my finances so that I have $100,000 per year available for health insurance when I'm 65. (I'm paying $4,000 this year at age 46.)

However, I suspect we won't get to the point where the average person is paying $100,000 per year for health insurance. There'll be some kind of revolution long before that happens.


This is insane!!! $4,000 per year at 7% CAGR for 24 years is an inflation adjusted $232,707!! If you wanted to spend $333 per month in medical services in Costa Rica, you could practically live at the doctor's office.

When I did my medical training in the USA, I remember that most of the money spent at the teaching hospital was to prolong the suffering and death of terminally ill old people. I suspect that is still one of the main cost-drivers in American medicine today.

I'm going to start selling cynaide capsule necklaces over the internet. When push comes to shove, if you can't do it yourself, you get a family member or a trusted friend to lift it the capsule from your neck and into your mouth. Then you just bite down hard.

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Author: TamarianG Big red star, 1000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34333 of 75375
Subject: Re: retirement medical expenses Date: 4/24/2002 11:34 AM
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I haven't made a study of this yet, so I'm pretty much speaking on the firm grounds of complete ignorance over here...

But it seems to me that if health insurance is going to cost us $2,000 per month (I know, I know, that wasn't meant to be a hard number!), wouldn't it be more cost effective to self-insure? Especially considering that in addition to the month premium, there is always a copay which ALSO seems to be sneaking ever upward in price...

I find it difficult to believe that medical treatment will really cost that much. We have medical coverage right now that is costing me $450 per month for my family, and I've begun analyzing just how cost effective it really is. I've started asking my doctor how much each visit would have cost us if we were writing her a check that day for the services provided, and started demanding to know how much prescriptions would have cost me without the coverage (I've been surprised a few times to find out they were actually less than my copay!). I'm keeping a spreadsheet on this - if anybody's interested, I'll post the results; I'm planning to take a one-year read before I do anything drastic. This is for a family of five, with three kids ages 4 months, almost-2, and just-turned-4. I figure if we lump all of us together, we're probably using about as much medical treatment as my 80-something grandmother with all her assorted high blood pressure and cholesterol issues. ;-)

Early research indicates that it may be more cost effective for me to put about $350 of that money into a savings account each month against doctor visits and whatnot and ONLY carry major medical - coverage with a high deductible against truly tragic events. The main fear is, "What if one of the kids comes down with leukemia or something" (oh man, I just gave myself an upset stomach just thinking that!) - but on the other hand, just as employment has become less and less permanent, I've heard an awful lot of stories about HMOs cancelling your policy the instant someone on it becomes "uninsurable."

But, as I said, I haven't made a major study out of this as a "whole" issue. And besides, I have to say that there are times that I would love to vote with my feet on the entire "no, we don't cover that" HMO deal. I've already been stiffed TWICE for over $1500 because the pediatrician at the hospital where my kids were delivered wasn't an "approved" pediatrician. Geesh, as if you can direct that kind of thing...and besides, the one time, it was my new daughter's primary care physician! But due to a convoluted process involving the phase of the moon, the color of the oak leaves that day and the precise time the sun set, she was technically covered under my specific insurance, which specifically states that we must use a pediatrician who is in a specific medical group which has, specifically, about two pediatricians in all of the West coast...

Onward!
Tamarian

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Author: jaroman Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34334 of 75375
Subject: Re: retirement medical expenses Date: 4/24/2002 11:39 AM
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Not only do I agree with the "insanity" verdict, I also agree with your solution. We treat our pets with more humanity.
I have also seen prices for medical services skyrocket due to policies designed for CYA-it's the American Way.

Disgusted,
jaroman

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Author: mikeg1382 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34337 of 75375
Subject: Re: retirement medical expenses Date: 4/24/2002 1:37 PM
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I agree that prices seem to be soaring, but I believe in the revolution theory as well. Things cannot keep going as they are, and the system will be fixed before I retire (in 30+ years).

Mike in NJ

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Author: jrr7 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: 34343 of 75375
Subject: Re: retirement medical expenses Date: 4/25/2002 9:35 AM
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Early research indicates that it may be more cost effective for me to put about $350 of that money into a savings account each month against doctor visits and whatnot

If you're in a small business, have you looked into medical savings accounts? You can deposit 65% or 75% of the deductible each year, and use the money for medical expenses. Deposits are tax-deductible and interest is tax-deferred (like a traditional IRA).

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Author: tache Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34386 of 75375
Subject: Re: retirement medical expenses Date: 4/28/2002 8:13 PM
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I sympathize with all of the complaints about the rising cost of healthcare, but what are all of you doing about it? Technology is certainly a part of the problem but do we want to discourage it? The biggest problem now is the administrative cost of providing medical care! In fact the administrative aspect doesn't provide medical care it just churns the premiums and spits them into the pockets of individuals and companies that have nothing to do with direct medical services. HMOs are really agencies to ration health care while channeling part of the premium to administrators and stock holders.
Maybe we don't need the Canadian system but we certainly need some sort of single payor system to reduce the overhead of the medical system.
How long will doctors be willing to care for Medicare insured patients when the government is reducing payments to physicians by 5% per year? Pharmaceutical companies advertise drugs without even suggesting their indications. They just suggest you ask your doctor whether you should be getting them.
How about the population with rising obesity? The complications thereof certainly are expensive in dollars and human terms.
I am not convinced that medical care should be provided by employers but I do think that some premium payment would be appropriate. Then the employees would have to investigate carefully the providers of care, insurance company etc. If we scrutinized these things as carefully as the Gardners look at stocks we would all be better off.


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