No one saw that one coming. Suddenly, the next four years present increased uncertainty for those of us in the ‘States and to a lesser extent, the rest of the world.
Fact: I don’t like financial uncertainty.
ACA?
When I first stumbled on the concept of early retirement, one of the issues that I was uncertain about was health care. While far from perfect, the Affordable Care Act (ACA) was a solution. My wife and I were even ACA participants for a year before she went back to work. At ~$700/month for a high deductible plan, the cost was high, but it was better than nothing. We also knew that the cost would go down when our income decreased in retirement and we’d become eligible for subsidies.
Donald Trump has vowed to dismantle the ACA. Perhaps he’ll replace it with something better. Perhaps health care costs will double or triple. Perhaps he’s full of shit and won’t do anything at all. I have no idea. And I don’t like it. I can’t account for the cost of health care, so how can I possibly know how much money I’ll need in retirement? Retiring now is suddenly more risky.
Without children, the story would be different. If costs went through the roof, my wife and I could pull up stakes and move to another country. However, I want to raise my children in the United States and the youngest is 7, so we have a way to go.
Since the first part of retirement is critical, I just can’t quit now.
Not all Bad News
The key to a successful early retirement is flexibility. To people who say this:
What if the stock market drops 50% the day after I retire?
I answer:
Just go back to work.
Instead of going back to work, I’ll stay at work. The good news is that it will only be 3 days per week and I’ll have 12 weeks off.
I’ll reevaluate in late 2017. For now though, it’s one more year.
How about you? Have your plans been trumped? Am I worrying too much?
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Who knows what’s going to happen. He’s already come out and said he may leave parts of Obamacare in place. We’ve purchased 4 years of uncertainty, so I think we better get used to not knowing.
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Yep, who the hell knows. I read the same thing last week and now yesterday, ‘Let’s repeal on the first day of work!’ I don’t think he has a clue. 2017 will be interesting if nothing else.
I think it’s obvious who you voted for but I just have to ask…did you feel confident in your ACA year over year premiums. I believe the 30-40% premium increase in Nov depending where you live played a part in this election. Either way I think healthcare is an issue, and while ACA fixed some obviously flaws like preexisting conditions, that math to make it work it fuzzier than a Detroit pension plan. Truly not trying be start a political argument but you had to have a least a little worry about aca premiums already going up year over year. I think healthcare is my biggest hurdle in me actually pulling the trigger in a few years, regardless of who won this election.
Two things:
1. Premiums didn’t go up horrifying amounts for most people receiving subsidies. People in FIRE could plan their incomes in such a way to make subsidies work for them if they couldn’t afford insurance without.
2. The ACA, flawed as it is, is at least a structure to plan around. I felt that it at least reduced uncertainty (i.e., known unknowns like premiums are easier to work with than unknown unknowns like health).
Someone with a million or two million shouldn’t be getting government subsidies. Even if I reach that status someday, I object to that notion, don’t most of the people on here too? Nothing is for free, the ACA math doesn’t add up on it, somebody has to make up the difference. The difference was being charged against the non-subsidy people…..small business, or self employed at a rate 15x the inflation rate.
I hope they can pull a magic rabbit out of the hat, but I don’t see how.
Ha ha, I have voted for both parties in the past, but I didn’t vote for the GOP this time.
To clarify my situation, we’re fortunate not to be currently on the ACA as my wife has a job that provides excellent health care. Some day, she will leave and we’ll need something though.
I do agree that health care in the U.S. is an incredible mess. It wasn’t working so hot before the ACA either…
“Who knows what’s going to happen. He’s already come out and said he may leave parts of Obamacare in place”
I’ve said this on other forums, but here’s me saying it again: it’s impossible to leave “parts” of Obamacare in place. You either have to keep the whole thing or throw out the whole thing.
The part of Obamacare that everyone likes is the ban on denying coverage for preexisting conditions. But if you only keep that part, people will wait until they get sick and then sign up for coverage. Instant death spiral, the insurance industry collapses.
To prevent the death spiral, you have to have healthy people buying insurance and paying premiums. The way you achieve that is with the individual mandate.
If you only have the mandate, some people find themselves required to buy insurance they can’t afford. So you add government subsidies that scale with income.
Preexisting ban, individual mandate, subsidies. That’s Obamacare in a nutshell. It’s a three-legged stool. Remove or alter any of those three parts, and you have a system that’s guaranteed to fail.
You are correct, but it did nothing to control the costs on the other side of the equation, thus we have $600 Epipens, $10K emergency room visits, and premiums that many can not afford with or with-out a subsidy.
If we are going to be mandated to buy it, then other things need to be put in place to keep it reasonably priced. That means Drs getting a little less, Lawyers getting a lot less, execs getting less, schools charging less,etc.
And honestly, I think it was designed to fail in the first place. Those that were putting it together dream of a national health care system like medicare which I don’t know too many people that like that either.
“You are correct, but it did nothing to control the costs on the other side of the equation, thus we have $600 Epipens, $10K emergency room visits, and premiums that many can not afford with or with-out a subsidy.”
That’s just not true. Obamacare has lots of provisions to control costs.
One of the big ones is shifting Medicare toward a “fee-for-outcome” payment model, where doctors are paid a fixed amount per patient plus bonuses for quality of care. If their patients stay healthier, they share in the savings. This is in contrast to the old “fee-for-service” model, where doctors are paid for every procedure they perform, creating a perverse incentive to keep people coming back for unnecessary tests and treatments. See:
http://www.politico.com/agenda/story/2016/04/obamacare-delivery-reform-000088
But the biggest cost-control measure in Obamacare is making sure everyone has insurance! Those $10,000 emergency-room bills you complain about exist because hospitals have to write off a lot of charity care for the uninsured who show up on their doorsteps, and they have to make up for that somehow. When everyone is paying premiums, the costs will be more fairly distributed. Plus, people with insurance are better able to access routine preventive care, meaning they can get small problems fixed before they turn into big, expensive problems.
Have your plans been trumped? No idea, will have to wait and see, albeit I’m also worried that the negative impacts will outweigh any positive developments from your recently elected new POTUS.
However, you make a good point, if shit (pardon my French) hits the fan, you should just go back to work (assuming you still can in a economy in crisis).
Team CF recently posted…October 2016 Cheesy Index
I understand where you’re coming from – before the ACA I would often read that the only thing preventing someone from starting a business or leaving their job was the insurance. Perhaps they had a brilliant business idea, but someone in the family had a pre-existing condition that made them uninsurable. Often one person would start a business and the other would continue to work, just for the insurance. On the other hand, the premium increases and unprofitable business for the insurance companies isn’t a sustainable model. I hope they can find a way to keep the key parts of the legislation while making it sustainable.
As for whether my plans have changed, in the short term they have not. But I would definately need to re-think post-FI plans. My husband almost died of septic shock four and a half years ago and has had ongoing medical conditions since that time. I would guess he would be uninsurable, and given his history of $500k+ in medical expenses I can’t have him go without insurance.
Due to my concerns about our insurance costs I have been watching this closely and Trump has said he is in favor of keeping the pre-existing conditions protection for consumers.
Yep, true.
I did hear that, but I’ll just say that right now I’m hesitant to trust anything regarding the ACA. The various promises seem to be changing daily, which is not unheard of in politics. I’m planning to wait and see how it all shakes out, and would not be surprised if the pre-existing condition option was taken away.
The key to early retirement is not only flexibility, but having a cushion too. ObamaCare wasn’t going to be sustainable for the federal or state governments with all the subsidies so I’m wouldn’t have been surprised by them going away eventually. Turns out it was four years sooner than expected.
I focus on what I can control and that includes being healthy so that I hopefully won’t require as much expensive healthcare. It’s not cheap now and it won’t be getting less expensive in the future so plan accordingly!
Oh yeah, Green swan, nothing can ever happen to your health if you just eat your greens. I see this more in the US, the weird belief that you, and you alone, decide what your health will be like in the future. It’s just unrealistic to have such strong faith in that. The facts are different.
Yes, eat your greens. Yes, go out jogging and wear bright clothing. But it’s still perfectly possible that one day you’ll be diagnosed with an illness. Bad luck. Or a condition that runs in the family.
We’re all only human after all…
Hey Petra,
the green swam did write “I hopefully won’t require as much expensive healthcare”. There certainly is no guarantee, but with an optimal diet you can significantly reduce your risks. That alone is worth a shot as part of your FI strategy. But a cushion will certainly still be required to accommodate extra healthcare expenses in case they occur beyond your control.
Team CF recently posted…October 2016 Cheesy Index
Yes, but you’re overlooking that fact that prevention is one of the most expensive aspects of healthcare.
In my grandparents’ generation, people only went to the doctor when they were sick. Now we get vaccines, yearly physicals, cancer screenings, allergy testing, prenatal care, etc. Think about all the technology we have to screen for disease too.
Don’t get me wrong – it’s a good problem to have. But staying healthy costs too.
Hi Beth, I care to debate that. Preventive medicine is far from the most expensive aspect of healthcare. Screening, test, etc. certainly costs a fair amount of money. But actual operations, like open heart surgery, are far more expensive and almost completely avoidable with a healthy diet. As an example, based on investopia and healthgrades numbers. Open heart surgery can costs as much costing as much ~$324.000 each according to investopia. The average costs is however $40.000, but with a yearly number of 395.000 operations per year in the US, that is a total medical bill of $15 billion! You can do an amazing amount (read tens of millions) of tests/screenings/physicals for that.
Yes, an individual screening doesn’t cost that much to do compared to surgery – it’s the technology behind the screening that is the expensive part.
Also, yes, you can do a lot of screenings for what it costs to do a surgery – but that’s kind of the point. I can buy four pairs of pants for the price of a winter coat but the fact is my wardrobe requires both. Yes, a pair of pants is cheaper than coat but I need more of them. Not an ideal comparison, but my point is looking at cashflow.
So in Canada where health care is socialized, it’s the overall budget that matters. Prevention for the masses can be very expensive when you look at volume.
I don’t think that is what I said…
I know unfortunate things could happen at anytime to anyone to negatively impact their health.
I also know that we have more control over our health than many may care to admit.
And there is nothing wrong with wearing bright clothes while jogging. If it ain’t neon…it shouldn’t be on…
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Hey GS, we’re actually all really healthy. The issue isn’t the cost of going to the doctor, it’s the basic cost of the insurance. As I mentioned, we were paying $700/month for the basic plan on the ACA.
And you’re right about the cushion which explains why I’m sticking around.
I didn’t mean you aren’t healthy, sorry for the confusion. The cost of health insurance premiums is a sunk cost to me, but being as healthy as we can and HOPEFULLY not requiring as much healthcare will help us avoid paying the high deductibles every year.
The Green Swan recently posted…My Money Mistakes and Regrets
Dealing with uncertainty is the essential part of any kind of planning. So to answer your question, no it hasn’t changed my plans for retirement. Especially since this was intended to be ‘early’ retirement, or in my case an early cutting back of the number of hours spent earning money, I like what I do and my career is still evolving each day so I will keep doing it till I no longer want to or can’t.
My plans have never included receiving subsidies or anything else from the Govt in the future because they seem to have shown themselves to be singularly incompetent when it comes to financial planning hence unreliable as a source of money. Hence, my plans were created using a financial model that looked at growth of costs in the past and present and applying a ‘safety factor’ to it and then doing sensitivity analysis to the different factors that influenced costs. Changes in governance of this country (barring a change to a military dictatorship which has a very low probability in my lifetime) don’t influence my model’s projections very much.
In my model the two fastest rising cost components are education and healthcare. In your case you have both in there, one will drop off when your kids start their own careers. The former has to be tackled by your kids and their grades and your coaching on tactical strategies on where to take what classes to keep costs down and what to study to help them in the future. It can be managed.
Healthcare is a bigger beast because you don’t control it other than staying healthy. I suspect that the runaway costs in this country will implode at some point but that is different discussion. So the best you can do is assume that growth rates will remain unchecked for a while around 20% annually i.e. costs doubling roughly every 4 years. They actually got worse under ACA (if you did not receive a Govt subsidy) That plus having a sum to deal with the ‘catastrophic illness’ is frankly the best that you can do. If you never have the catastrophic condition then you’ll leave your kids with a nest egg when you pass.
“I suspect that the runaway costs in this country will implode at some point but that is different discussion.”
Yeah, it can’t continue like this. It is just crazy to me that a high-deductible plan costs over $8000/year.
No change here, I’ve built our plans off the assumption that we will get no government upside. That way if there is a positive move we’re even better then good, a negative move and we’re also fine. I’m not super concerned though. Typically campaign promises don’t end up seeing the light of day, if the last 16 years of politicians is any indications.
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As a Brit we have our National Health Service (NHS) so in theory I don’t have to worry about healthcare, however given the government is going to be worse off by £25bn a year once we leave the EU (that’s £600m a week for Brexshitters who don’t understand data) the NHS’s days are numbered.
Next we get to find out if Marie Le Pen can win in France and if that happens then the EU’s days are numbered in which case our NHS is almost certainly doomed. Putin can start his proxy wars all across eastern Europe while Trump sits back and ignores NATO.
I will continue to save hard and invest in property and stocks/shares in the hope that those assets will survive the storm. Things are looking very grim though unfortunately.
Well, the pendulum swings back and forth. Even if we’re in for some short-term nastiness, I do believe that people will eventually come to their senses.
Love your writing
I think you have always Been looking for a reason to stay working glad you found one.
It’s actually quite the opposite. I’ve been looking for a reason to leave. And, I may have found it a couple days ago. I’m very conflicted right now.
I thought the whole point of FI was to have the choice to do want you want to do without the consideration of the money.
If working is fun or cool then stay if not then leave.
Have I got this Wong?
Well, I should take back my previous comment a little bit. My work has been very good to me. I’m extremely lucky, but I feel that I have better things to accomplish in life. I don’t want to retire for the sake of retiring. More soon.
For now…… no change. I’m still in my accumulation stage, so I’ve got a while to go before I have to make any decisions. Thankfully my employer has pretty decent health insurance options.
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My plans haven’t changed. I’m still 9 years out, which gets my kids out of undergrad (hopefully!). I really hope they get the healthcare issue worked out. It’s ridiculous that people are avoiding entrepreneurship because they can’t get health insurance!
I did not vote for Trump, but at this point, I hope he is amazingly successful – we’re all in the same boat after all!
Also, I think it’s a smart move you are making to stay on a little longer. Plus at three days a week and 12 weeks of vacation, can you really call that working? lol!
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“I did not vote for Trump, but at this point, I hope he is amazingly successful – we’re all in the same boat after all!”
Good point, as long as he is successful at the right things!
For now no change indeed. However, we are both now more certain that Mrs. SSC will most likely need to find a teaching gig somewhere else before we pull the trigger on this whole deal. I mean, yeah she loves teaching and wants to do that anyway, so that’s not much of a change, but it did take out the underlying assumption that we could jsut say, screw work, and have affordable health coverage.
Although, with the amount of insurers dropping out, and the costs going up like they did the first year, I’d still be worried about it even if Hillary had gotten elected. It didn’t seem like the current 1.0 version was sustainable, regardless of who got elected. She just wasn’t running around yelling about repealing the whole thing.
Fingers crossed that Trump doesn’t F up the whole thing and keeps something in place that is sustainable and affordable, but like you said, “who knows?”
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Health care certainly is broken. And I agree, Hillary may not have done anything to make it better.
What I didn’t like about Trump is that he went on and on about repealing it, but never said what exactly his plan is for replacing it. If you’re gonna complain, you must be part of the solution too!
What I didn’t like about Trump was – well too much to mention here, lol. 🙂
Like most of his “plans” there wasn’t anything ever mentioned beyond armwaving big picture rhetoric. Hell, I think most of us on these forums have come up with better, more realistic plans than he has so far. 🙂
I agree, you shouldn’t complain without being part of the solution.
Mr. SSC recently posted…Our Flexible Spending Account Rules Suck: Do Yours?
I don’t live in the US so I don’t have a dog in this race, per se but I consume a lot of US media and it has got me thinking about long term changes that can affect early retirement. For example, I saw an article about Paul Ryan repealing Medicare and imagined how much chaos that would create. Hospitals would still have to serve people in emergencies so costs would skyrocket for everyone as emergency costs are way more expensive than preventive costs. Someone will have to still pay for that.
It makes me wonder what many western countries will do – especially those with social healthcare – as the population continues to age. It would definitely put a wrench in my plans if suddenly social health care disappeared tomorrow. While I don’t think it will (too popular amongst people of all political stripes) it is definitely worth thinking about. You never know what may happen in the future.
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My husband keeps the insurance thanks to his job, but he is a decade older than me, and my desire to retire with him 100% pivots around health insurance. I have preexisting conditions and would not have been able to get insurance on the open market without the preexisting clause. My own sister went 20 years without insurance, as she worked for a small business and could not get insurance thanks to preexisting herself. This year is the first she has it in her adult life. I won’t say I wasn’t concerned about costs, because clause or not I still would have higher rates. I was hoping I would be able to teach nursing part-time post retirement to get benefits if I could.
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Since I’m still in the accumulation phase, my immediate plans are only slightly different.
The thing about the ACA is that it abolished the pre-existing condition issue (and it did impose some cost containment as well that I was hoping they’d build on). Without the requirement to have insurance and the subsidies, you simply cannot reasonably require insurers to cover pre-existing conditions. So, it’s toast.
In my situation, this means that I simply won’t be able to figure out my new plan until the smoke clears. I have to assume that I keep working, basically indefinitely, because I’m pretty sure there is no way to self-insure for our situation. But, I could be wrong, so I’m going to just keep on keeping on and, as I said, figure out a new plan when more information is available.
I really am not a fan of big changes, although I did think that some parts of the ACA needed to be reworked. I’m completely concerned that my healthcare costs are going to skyrocket, especially if the federal government pulls subsidies. I had a prescription that went from being $100/mo to $0/mo thanks to ACA, so I’m a little nervous about that coverage in the future.
However, our early retirement plans haven’t changed. We’ll still have insurance, since it’s currently the law, but we’ll mostly rely on ourselves for coverage in case we have a catastrophic medical issue (which would still be covered by insurance in that case anyway).
I’m sorry that your timeline’s changed though! It’s always a difficult situation to be in, especially during uncertain times.
Mrs. Picky Pincher recently posted…Our Financial Bucket List
And thanks to ACA we had a prescription go the opposite direction. It was “reasonable” at $200 for 9-pills and now is like $450.
The system is so complicated that hopes of a reasonable solution are not very high.
We have two of our children on a health sharing plan. Our HMO wouldn’t cover them as they are out-of-state. The cost is quite reasonable, but as it is not true insurance, it leaves many fearful. Although so far, so good.
cd :O)
Oh holy crap, that sucks!!! Sorry to hear about that. I know; it’s like no matter what changes are made, there’s no perfect solution.
I’m still a ways out, but, yes, that ACA was definitely something that could have helped with retirement. That does suck that it screws up your plans, but hopefully it won’t be completely dismantled.
Regardless, even if it doesn’t change in the near future, who knows – it could always be stripped away after guy or gal in office… or the one after that! You just never know.
I’m throwing in a number of $10-15k per year for my guess for medical for my family when I do my numbers. That could leave me really happy in retirement if the ACA still offers something for us or I could be working Starbucks part-time just to get health insurance if costs skyrocket.
— Jim
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It’s better to be safe than sorry in uncertain times. My first goal on the way to financial freedom was buying my first house. The uncertainty that Brexit brings means I’m in no rush just yet. Well, that’s providing they can decide whether or not it’s going through. Seems both our countries are set for major change one way or another. P.S. I almost choked at the cost of your health insurance, we really don’t realise how lucky we are in the UK to have the National Health Service, if you could hear how much people moan about it over hear you’d probably hit them! 🙂
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Just like markets, early retirees hate uncertainty. The ACA has, without a doubt, slowed the rate of increasing insurance costs.
http://www.factcheck.org/2015/02/slower-premium-growth-under-obama/
What happens next is TBD, and it’s very hard to plan well for early retirement when you can’t budget for one of the truly big line items.
We’re still a few years off so, hopefully, we can at least plan out healthcare costs by then.
Thanks for the FactCheck article. I think it will be OK long term and I’m already feeling a little ridiculous for publishing this.
$700 a month is roughly the cost for my family without the tax credits too…so your numbers seem about right.
Some analysts doubt he will completely repeal the ACA, but a fair bet is that the tax credits are gone. Do you have enough for healthcare without the credits?
I had to do my own math on this myself…to see if I needed to head back to work.
We are lucky in that the Mrs. gets health care at her job now. I’m thinking of the future when she doesn’t work. Perhaps I think too much…
If and when Mrs CK ever gets tired her retirement gig, the plan was to sell and move somewhere cheaper. Whether that was in the US or abroad had been up to debate for years. Much of the concern centered around healthcare, which would become one of our largest expenses. After ACA came into existence our thinking was to stay in the states. Now, we will just have to wait and see what happens.
We are going to Costa Rica again in the coming weeks. Some more due diligence might be have to be done in addition to surfing.
Surfing! Lucky.
I’m still in the growth phase and plan to work a corporate job for a number of years yet. My Wednesday uncertainty was layoffs at my company. First time I’ve survived one, but stock options aren’t worth much at the moment. While I’m very hopefully, the company future is uncertain, so lots to be seen in the next few years how it all shakes out. Best of luck! Cheers to 3 days weeks for now.
No doubt ACA is first and foremost on all the minds of potential early retirees as well as millions of others. We are fortunately able to jump onto a plan offered by my company when I retire although the costs are going to be ~70% higher than what I could currently (current being the key word here) get for a similar type silver level plan on the exchange. Looking at $800-$1,000 per month for our family of four on the company plan. We can absorb this but no doubt we are going to be watching other costs very closely indeed. I am glad that we made the decision to pad our accounts and strive for financial freedom in the summer of 2018 rather than pull the plug now and not sleep well worrying about our overall budget and plans. I have a feeling a large number of folks about to pull the plug will be agonizing over their plans and no doubt many of them will delay them with all this uncertainty. It is very troubling no matter which way you look at it.
As you say, just like good investors, people who are considering pulling the plug also hate uncertainty.
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My wife and I just discussed last night how we are going to proceed.
I’m lucky to work at a public university (job security, 100% paid family medical) and my wife contracts with non-profits (high wage, no benefits). It looks like the federal funding/grants she works with won’t be renewed under this new administration when they dry up in 2 years. We had planned on ending work in 2-3 years, move abroad so our now 6 month old would get a global perspective, and live off of our rental income. So what to do?
We decided that we would scale back investing in stocks (from 50% to 20%) and ramp up our buying of single-family homes (the numbers work well in our area). The prez-elect can screw with a lot of things, but likely not real estate in our area. So, we will just plow our savings into adding a few more rentals than we had planned and keep our fingers crossed that a global recession won’t kill our stock market investments. We also decided we need to look at protecting our assets from bankruptcy (a trust?) if we did end up with serious hospital bills, so there’s that. We decided to increase our annual contribution to our daughter’s 529 just to give her a little more cushion from future uncertainty.
As for healthcare, that’s the big unknown for us as I would like to stop work at the university in 2-3 years leaving us without paid-for healthcare, but it looks like I’ll stick it out for at least 4 years given this new information…
Just a reminder to all that The Black Swan by Nassim Taleb is a great read right now!!
Wow, pivoting to real estate! I think that is a bold and smart move. People gotta live somewhere.
And I’m dying to read that Taleb book!
Frankly, I worried just as much about Obamacare staying around. My premium keeps going up and up, deductibles up, the number of in-network options and insurance providers decreasing every year. Now I just hope for the best because Obamacare wasn’t getting better for us. Maybe this will. I am choosing optimism.
“Frankly, I worried just as much about Obamacare staying around. My premium keeps going up and up, deductibles up, the number of in-network options and insurance providers decreasing every year.”
Literally all of those things were true of health insurance pre-Obamacare. Only difference under Obamacare was that cost growth had curved drastically down, 20 million more people had healthcare (with the un-insured rate under 10% for the first time in history), and there were protections against dropping coverage for those with pre-existing conditions/provisions allowing children to remain on parents’ plans up to 25 years of age, etc…..
I’m just saying — be honest. Obamacare didn’t cause those things you complain about — they were always there. But Obamacare DID improve healthcare for literally millions of people.
I am so happy that we have insurance through Mr. Mt’s military retirement. It is a huge relief. And while it is totally a government run program, full of flaws, at least there is no talk of scrapping the whole thing.
I don’t blame you for waiting a year. But at the end of the day, it is a bit like stocks dropping. We are betting that it will be better in 10 years no matter the price today. I really want to believe that in 10 years we will have a better, more stable healthcare option than we do today. That being said, it would be an even more stressful time to get cancer results from your doctor.
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“But at the end of the day, it is a bit like stocks dropping. We are betting that it will be better in 10 years no matter the price today. I really want to believe that in 10 years we will have a better, more stable healthcare option than we do today.”
Love the analogy!
I’m glad that I live in Canada and have no need to worry about health care thanks to our socialism mentality.
It will be interesting to see what changes Trump decides to make.
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No need to worry – if you don’t mind waiting your turn.
It sounds to me like you need some tough love right now, so I’m going to lay it out for you!
1. First and foremost, nothing has changed yet. You have no idea if your costs are going to go up – or down! It’s good to have a plan, but to throw in the towel before you even see what you’re up against?
2. You’re too smart and too productive to require an extra year of work. You have a giant list of projects that you want to work on in retirement, how many of those involve making a profit of some sort? Retire, then start with the most interesting & lucrative ideas on the list.
3. You’re going to keep paying attention to your net worth post-retirement, right? If you start seeing red flags, you’ll react.
4. I don’t believe you include Social Security in your retirement fund calculations, so don’t forget that eventually that little bonus buffer is going to kick in.
5. Once your kids graduate, you can use geographical arbitrage to cut expenses if needed.
6. If you need any major medical procedures and don’t have great insurance, consider medical tourism! Drive Nacho Drive had LASIK done in Mexico for $1280, as compared to the US which tends to run $4000-5000.
7. From JLCollins post on safe withdrawal rate (stock series part xiii): “In fact, the authors of the [Trinity] study suggest you can withdraw up to 7% as long as you remain alert and flexible. That is, if the market takes a huge dive, cut back on your percent and spending until it recovers.”
8. From your post on the 4% rule: “I’d rather take a chance to be free than stay chained to my desk in the name of safety.”
In fact, I think you’d benefit from re-reading that entire post: https://www.1500days.com/thursday-rant-why-the-4-rule-wont-steal-your-spouse-or-give-you-the-clap/
That post is full of hope and optimism! Where is that optimism today? I understand that Trump brings a level of uncertainty to the table, but it’s likely that any Republican president would have made changes to or dismantled the ACA, and it’s very unlikely that we would have a solid run of Democratic presidents during your retirement.
To me, this is just another uncertainty of retiring early. Health care is likely to remain a challenge no matter who our president is – but since you can’t predict what’s going to happen, you’ve just gotta roll with it! I think you’ll do just fine.
tl;dr Yes, I think you’re worrying too much.
This. Is. Awesome.
Thanks for the reality check. I have so many good things going on in my life right now, I feel guilty writing about them. I feel like I live in a fairy tale on some days.
Big thank you for the needed kick in the ass!
I’m glad you feel that way because I was somewhat concerned about being an asshole. And I am also hiding behind some anonymity here and I was trying not to use that an excuse to say anything I wouldn’t say to someone’s face.
No offense taken at all. I’d much rather have someone challenge me than surround myself with Yes-men (or Yes-women!).
I totally get your apprehension. I study the presidency and politics for a living and this has been the weirdest political season ever. The problem with Trump is that he doesn’t know how to negotiate Congress yet. He doesn’t know what to replace it with. In fact the Republicans don’t have a specific replacement plan, they just want the ACA gone. That will prove really problematic. So I get it. I do think there will be a replacement, but it will most likely be a high deductible plan with an HSA.
At this stage of the game, I don’t even want to speculate what changes are going to be made to the ACA. We are likely around 8 years away from retirement, so we will continue to take part in our company’s HSA and sock away as much money as possible.
I prefer to not rely on the kindness of politicians to dictate when I can retire. We don’t want to rely or count on subsidies. So we are going to continue living a healthy lifestyle and save enough money to pay high insurance premiums. We would be fine with a high deductible plan. If a major illness hits us, we should have enough to (hopefully) cover a few years of the out-of-pocket maximums.
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Leave it to that Pumpkin-spiced Ass Hat to ruin well made plans!
In July I gave 6 month’s notice of my early retirement in December, age 52. I helped hire my replacement who started this week, which means it’s too late to reconsider.
For the time being, my wife’s employer has retiree health insurance (we have to pay for it at full price though). They could stop this benefit at anytime and we always considered the ACA to be the backup plan ever since the supreme court up held it.
FYI to a previous commenter: Subsidies are based on income, not net worth. A multi-millionaire with low taxable income still qualifies for subsidies.
I think the one who questioned whether the subsidy is appropriate is probably aware that it is based on income. That doesn’t change the question as to whether or not someone with a large net worth regardless of how they are drawing it down, should be receiving a subsidy or not.
The ACA is not a good program. It does need to be overhauled. If you are receiving a subsidy, someone else is paying for it. At the moment, I am one of those people.
Trump will be good in some areas. And I’m sure he will make mistakes in others, just as all Presidents have and just as HRC would have. But don’t blame him if you have to put off ER a bit longer to firm up your savings.
There are low cost health sharing plans out there. At least one has a phase in plane for pre-existing conditions which seems to be a concern for many.
I was already 85/15 but I decided to get a hair more aggressive, figuring corporations are about to get everything they want. In my IRA I sold some Vanguard Total Bond and some International Index and bought some Vanguard Energy and more Total Stock Index. It is timing, perhaps, but I only moved $75,000 of a 7-figure, diversified portfolio, and the moves actually put our asset allocation right on the nose of the Efficient Frontier in the Personal Capital app. I don’t mean to sound smug and confident, because I’m not, and am unhappy about the election. However, it is possible there will be an upside for U.S. investors in all of this, which I want us to be positioned for. Thanks for asking and good luck to everyone.
Much of my money plans are on hold because I don’t want to get deep into the stock market now right before lots of policy moves make things even more unpredictable. Among other things the SEC chair is stepping down to let him appoint his own chair and he’s pushing deregulation so that’s even more uncertainty. Even if he’s full of shit and does nothing, Congress has a pretty long wishlist that may well include pushing all of these things through. So yeah, I’m not prepared to say early retirement is still in the cards until I see a lot more stability or have a lot more assets to work with and cushion any crash or recession.
As an outsider (we don’t live in US) this election has brought about uncertainty for us which has allowed us to invest at far lower prices. Though most of the policies do not directly impact us we are all waiting to see how other issues are handled.
Purely in terms of retirement planning it has helped along with the demonetizing by our government.
If this event is enough to derail your retirement plans you quite simply did not have enough saved, or you never had 100% confidence in your plan to begin with. Every article you’ve written oozes confidence about the long term future of this great country, its economy, and its future…this one event hasn’t changed that. Geez people retired in 2008 and if they stayed the course they are just fine. I’m with you being nervous, it’s healthy, but changing course now sort of flies in the face of the 350+ blog articles (including here) that swear up and down 4% rule weathers any storm. I am more of a 2.5% guy myself so I get it, but it’s sort of hypocritical for all these bloggers now to change their tune…now is the time to show resolve in your convictions!
The issue is that health care is such a massive expense. If we were on the ACA, it would come close to our mortgage payment. A couple more years of 15% increases and it would surpass it. In any case, I think we’ll know what’s going to happen very soon, so I’ll adjust and life will go on.
On another level, I’m making excuses. I wish I was perfectly adjusted (MMM), but I’m far from it. Money insecurity…
Life has been a roller coaster lately. Something else happened which is causing me to reconsider it all, in a good way. Post soon…
It would be interesting to see what happens to the ACA. I think you hit the nail on the head by stating that if you are flexible, you can cope with pretty much anything – from stock market crash, to change in tax laws etc.
While your youngest is 7, you will still be “young” in a decade even if you have to pay $700/month for insurance. Then you can just move offshore if you have to.
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I’m not making big changes to my plan, but I’m working on recession proofing in the near term. Regarding health care, well, that’s a big one.
I’m pretty healthy, but both my parents had cancer, my one biological aunt had it 3 times, my brother had it, and I’ve already had stage IV cells removed. I’m expecting that I’ll have it eventually, though I’m doing my best to avoid known causes.
The thing is, I know how much it costs to get care, and while I’m a well-paid professional in my field, I just literally don’t see a way for me to self-insure for that, particularly if I end up with multiple rounds of it like my aunt. One of the things I worry about, actually, is that insurance companies will find a way to implement a genetic screening component or to link my healthcare costs to my family members’.
The real problem, of course, is that I let myself get hopeful when I saw the ACA’s cost containment working pretty well. Sigh, there’s a reason that pharmaceutical stocks went up and hospital stocks went down in the immediate aftermath of the election.
Whoah, do you guys like on top of a decommissioned nuclear plant? I’m sorry to hear all of that.
Maybe Trump will come to his senses or come up with something better. I’m not holding my breath though.
Lol, well, for dad it might have been the Agent Orange. For mom, maybe it was smoking (though as far as I know she didn’t smoke with the part that got cancer), god only knows what happened to my aunt and brother, though.
There’s been a lot of commenting on the morality of higher net worth people accepting subsidies, I notice. Interesting thing about it is that I think it’s just the use of the term “subsidy.”
If it were called a tax deduction – even one that was income-dependent – I wonder whether people would get all het up over it. I mean, I don’t hear the outrage over people getting (often financially similar) deductions for their Traditional IRA spending or their hobby tax deduction or their mortgage tax deduction or…
Those tax expenditures come out of all of our pockets too.
I am not retired or semi-retired and I feel the uncertainty with 2017. I am a contractor and my staffing company is small enough to not offer any health insurance. So the last 3 years I have been using ACA as a way to keep insured. Its $473 currently for Silver plan to cover my family with lowish deductibles. 2017, premium I pay goes up $60 bucks after increased subsidies, which isn’t bad. The advertised 40% increases were not across the board and mostly at Gold level from what I could see.If the subsidy/ACA goes away it will be very expensive for my family much like it was before the ACA came into effect.
I noticed the same thing in Colorado. The bronze plan that we had hardly went up at all. Stupid media.
I think you’re reacting too early. Let His Rightness lay out his plan. Maybe it won’t be that bad.
Having said that, I love the flexibility you’re showing. Us FIRE folks often talk about the need to be flexible, and to react, and it is nice to see someone ahead of you along the path there practice what is often preached. As long as you keep that flexibility muscle well exercised, you’ll find a way, and you’ll be just fine.
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I’m with Darcy, I think you need a good “facepunch” ala MMM style. I expected the Chicken Little routine from the usual lemmings out there but I’m a little dismayed that so many people in the FIRE community are reacting this way.
– None of the fundamentals of the US economy have changed.
– The president can’t do much without Congress. GOP has only a slim majority in the Senate (and not filibuster proof) and I would not be surprised if some of the Republicans break rank if ACA is to be abolished without any alternative. Bottom line ACA isn’t going anywhere without some compromise replacement.
– Reality check: “uncertainty” in the US is something most countries would consider high level of stability and would love to have. How many countries can say that their transitions of power are so peaceful? How many countries would have handled the 2000 recount drawn out election or this year’s contentious election so well?
– SCOTUS composition will be the same as it was before Scalia’s death. Yet that same court upheld and passed many of the rulings everyone is so afraid now will be undone.
You’ve always said that you’re confident in your plans and if things change you can reassess and change your plans accordingly. Well, nothing has changed. Trump is not even president yet and you’re already changing your plans?! Stay the course, trust your plans, your skills and your flexibility.
And for crying out loud man, go have a good beer, enjoy the beautiful scenery in your area, play with your kids and stop freaking out 🙂
I totally wanted to call him Chicken Little too! You added some really great points, thanks for adding your opinions!
It’s so easy to be negative, what if this, what if that. What if things are great? What if all our fears are unfounded? What if our only regret is not retiring sooner?
Ha ha, points are well taken. SpacemanFry and Darcy, you are both wise.
Life has been a crazy roller coaster lately and I change my mind about my direction 10x per day. It is starting to clear though. Stay tuned…
Screw it all! I’m moving to Ecuador!!
**Oh yeah, I decided that before the election.:)
Healthcare seems to be decent in Cuenca, Ecuador where we’re looking, and costs for good insurance are about $200-250/month for a family best I can tell. Compare this to my premium on Obamacare (had I renewed for 2017) which just jumped from $888 to $1,090 this year with a $13,000 family deductible. It was $650 year before that. Yikes.
So I think we’ll be saving money in 2017 on health care! But I’m still generally in your camp. Give me certainty, good or bad, and I’ll plan around it. Obamacare with all of its flaws gives entrepreneurs and early retirees (particularly with preexisting conditions) flexibility instead of being stuck to a job for health care.
Clarification – those premiums were per month.