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I am all for retirement planning and currently max out everything I can. Over the weekend had a heart to heart conversation with a friend who has a very different view. He saves almost nothing and his argument is... "I don't want to put away money only to spend it all on health care when I get old". Instead, his plan is to retire poor, have social security pay for his daily needs, but at least he'll have government paid health coverage.
Pardon my lack of knowledge about healthcare costs and coverage when you retire, but how does one afford healthcare during retirement? You're no longer working, so there is no company sponsored health care insurance. How do you pay for all the medications you'll need, what if you need a procedure done at a hospital? God forbid, something like cancer comes along. With your 401k/ira/cash on hand savings, you're wealthy to the government. So how do you avoid losing all of that to healthcare costs?
In the USA Medicare is available at age 65. If said person is smart they get a plan to cover what Medicare does not. If they are living at poverty level or below they maybe able to get "Extra Help" to reduce prescription prices from Medicare.
I am all for retirement planning and currently max out everything I can. Over the weekend had a heart to heart conversation with a friend who has a very different view. He saves almost nothing and his argument is... "I don't want to put away money only to spend it all on health care when I get old". Instead, his plan is to retire poor, have social security pay for his daily needs, but at least he'll have government paid health coverage.
Pardon my lack of knowledge about healthcare costs and coverage when you retire, but how does one afford healthcare during retirement? You're no longer working, so there is no company sponsored health care insurance. How do you pay for all the medications you'll need, what if you need a procedure done at a hospital? God forbid, something like cancer comes along. With your 401k/ira/cash on hand savings, you're wealthy to the government. So how do you avoid losing all of that to healthcare costs?
Thanks.
I think your friend is foolish or he's hiding something.
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We met with financial planners and should be fine in retirement with pensions, SS and other investments. Still, after selling this house and paying cash when we downsize, our biggest expense is going to be the Medicare and supplement. I cringe when I here politicians advocating for "Medicare for All" as though it was a good deal. My current medical through my employer is costing me $80/month, maximum annual out-of-pocket $2,000. Medicare part B would be about $450/month, with a deductible, and even after that you have to pay 20%. Our plan is to keep our invested "nest-egg" intact for any exceptional medical bills, and live off of the monthly income.
Sounds like your buddy is planning to be poor enough to qualify for Medicaid because most retired people on Medicare, which costs not much money, also take out a supplemental policy to cover extra medical costs that Medicare doesn't cover and also have an RX policy to cover drug prescriptions.
Some retired people move to countries where medical care is less expensive than US and their Social Security check also goes farther because other costs are lower too. Of course Medicare/Medicaid won't cover them there but that's their plan.
For me Medicare+supplemental plan for Medicare+supplemental drug plan cost a LOT less than I was paying before hitting 65. If you aren't used to paying for your healthcare that's an expense you need to plan for. Medicare supplemental plans are affordable, many to choose from, so if you had a good job and have savings you'll find one no problem.
You need to find out what Medicare covers (hospital and doctors) and what the supplemental plans offer. We attended an AARP program that explained what Medicare covered and what different plans were available to "supplement" Medicare.
Most people don't freak out about health costs because Medicare and supplemental policies are affordable. What many people worry most about is cost of a nursing home because no Medicare or supplemental plan offers much help there. Nursing homes are expensive and some people have policies just for that.
I am all for retirement planning and currently max out everything I can. Over the weekend had a heart to heart conversation with a friend who has a very different view. He saves almost nothing and his argument is... "I don't want to put away money only to spend it all on health care when I get old". Instead, his plan is to retire poor, have social security pay for his daily needs, but at least he'll have government paid health coverage.
Pardon my lack of knowledge about healthcare costs and coverage when you retire, but how does one afford healthcare during retirement? You're no longer working, so there is no company sponsored health care insurance. How do you pay for all the medications you'll need, what if you need a procedure done at a hospital? God forbid, something like cancer comes along. With your 401k/ira/cash on hand savings, you're wealthy to the government. So how do you avoid losing all of that to healthcare costs?
Thanks.
You should post this question in the Health and Wellness subforum under "health insurance". There are some very knowledgeable people there. The subject is covered time after time after time. You could also investigate retiree health insurance coverage that may be available through the insurers your employer contracts with. Some do offer plans you can retain or convert into upon retirement. I have a policy like this and use it to offset health care costs my selected Medicare options don't.
Speaking of Medicare, obviously there are specific Parts, other than Part A for which most people pay no premium, you can purchase. Saving for that far off rainy day is a good idea as there's no way to predict what you might end up needing. BTW, your friend is a fool if he thinks ordinary SS will be adequate to pay for all his "daily needs". He should take a long hard look at what life subsisting only on Medicaid and SS might be like, what he'll need to spend down in order to qualify for assistance, and how long he may have to wait to get benefits.
Cancer? That's not the worst that could happen. A much hairier situation would be dementia. That can necessitate institutional level care for decades! Cancer? Not so much.
Even with "government" care coverage there will be expenses that fall through the cracks. Such as long term institutional medical or residential expenses. Be aware that costs for residential care (basically room, board, other facility expenses an assisted living facility might charge you) are often not covered by any sort of health care coverage. As with most things financial, you should know where that devil lives.
Last edited by Parnassia; 04-18-2022 at 04:03 PM..
Age 65+ people go on Medicare. There are various coverage types which can include almost everything, including supplemental insurance.
Before age 65 people can go on the ACA (aka Obamacare), and their monthly premium will depend on their MAGI (modified adjusted gross income), how much of a subsidy they qualify for, if they do, and some other factors like age and geographical area. The ACA covers all healthcare wellness visits, yearly health screenings like physicals, some plans offer low co-pays for doctors within the insurance network, and by law there are no exceptions for any pre-existing conditions, meaning everyone is covered, regardless of an underlying illness that existed. Prescriptions for generics can be very cost-effective, $4/prescription/month is common.
I am all for retirement planning and currently max out everything I can. Over the weekend had a heart to heart conversation with a friend who has a very different view. He saves almost nothing and his argument is... "I don't want to put away money only to spend it all on health care when I get old". Instead, his plan is to retire poor, have social security pay for his daily needs, but at least he'll have government paid health coverage.
Your friend probably needs to learn more about the "retiring poor" thing. There is Medicare, and then there is Medicaid. Anyone that actually plans to wind up on Medicaid...well, I would question their sanity.
Quote:
Originally Posted by Pianist718
Pardon my lack of knowledge about healthcare costs and coverage when you retire, but how does one afford healthcare during retirement? You're no longer working, so there is no company sponsored health care insurance. How do you pay for all the medications you'll need, what if you need a procedure done at a hospital? God forbid, something like cancer comes along. With your 401k/ira/cash on hand savings, you're wealthy to the government. So how do you avoid losing all of that to healthcare costs?
Thanks.
Medicare eligibility starts at 65. If you retire after 65 and no longer have health insurance (some people retain it from certain employers, as a retirement benefit) then you enroll in Medicare, and most people also enroll in a supplemental plan (called "medigap") to pay the co-payments/co-insurance. Most people also enroll in a Part D (prescription drug) plan. Your Medicare premium can be found online, and it is higher, for those with higher incomes. The costs for a medigap plan completely depend on which one you choose and who the provider is. My health insurance costs will be a about 2.5 times what my costs were before retirement, since I had a highly-subsidized employer plan. I know there will be a few things that Medicare will not cover, that were covered with my employer insurance, (dental/vision for one thing), but I believe they will be minor and I will need to cover such costs myself.
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There is Medicare, and then there is Medicaid. Anyone that actually plans to wind up on Medicaid...well, I would question their sanity. 
