I retired at age 55 thinking my 20 year pension would be enough to cover my pre-Medicare healthcare premiums and other expenses until I reached age 65. I was wrong.
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Retiring early has been great, but the expenses due to inflation have increased dramatically. So, thinking about retiring early? Think again.
Like every fall during open enrollment, I recently analyzed my healthcare plan and was shocked to learn my monthly premium was going up again. Inflation is really taking a bite out of my pension, but there is a silver lining.
The following chart shows the erosion that pre-Medicare healthcare premiums have had on my pension over the years.
I just received my new statement of earnings, taxes, and deductions for 2020. While I have received zero increases in my educator’s pension since I retired in 2015, my pre-medicare insurance premium keeps going up. From 6% of my pension in 2015 to over 18% in 2020. Happy new year!
In the May 2019 Fidelity Viewpoint we read, “According to Fidelity’s Decision to Retire research, conducted with the Stanford Center on Longevity,1 people retire an average of 4 years sooner than they had planned. For many who do have gap years between when they actually retired and when they had planned to retire, it can be a mad scramble to find affordable, quality health care coverage until they are eligible for Medicare at age 65.” I hadn’t planned to retire at age 55, but circumstances made it difficult for me to continue being a full time educator. I also felt I could scrape by working part time given my income and expenses at the time.
I receive $2,055.87 a month from the Colorado Public Employees’ Retirement Association and I receive a health care subsidy as part of my retirement benefits. Since retiring, these are my out-of-pocket monthly premiums for identical coverage for one person with a $6,000 deductible:
$131.00 beginning August, 2015
$131.00 in 2016
$170.00 in 2017
$210.00 in 2018
$334.00 in 2019
$384.00 in 2020 ($4,608/year)
Since I am only 60, I have five more years before I can receive Medicare. I already work part time as a substitute teacher but I may have to get another job to keep up with the increase in health care. For instance a recent visit to the dermatologist for minor skin cancer treatment cost me over $800 and they want me to come back in January. I have already decided to cancel this appointment.
What options do we have if we aren’t 65? We could save our premiums and put them in a self-pay fund or maybe look into Medi-Share or Liberty Healthshare. “Medi-Share is a healthcare sharing ministry where members share each other’s medical bills and pray for each other’s medical challenges.” Liberty is similar. The Fidelity Viewpoint article cited above offers other possibilities.
The silver lining is my pension is eligible for a 1.25% cost of living increase in July. Let me see, that comes to an increase of $25.70/month. Wow! I guess it’s better than nothing.
What is your health care situation like? I would love to hear from you about what you are doing to offset this cost. Please leave me a comment and do have a Happy New Year!
For the past 20 years, I have had about 40 skin cancers or precancerous lesions removed by either surgery or by liquid nitrogen. Now that I am retired and my insurance coverage has drastically changed due to the Patient Protection and Affordable Care Act, I may have to limit my skin cancer treatments. Maybe it should be referred to as the Unaffordable Care Act as it was called in a July 5, 2015 Forbes article. In this article author Richard Eisenberg stated, “…people are finding themselves facing enormous out-of-pocket health expenses — sometimes leading them to deplete their savings and rack up serious medical debt.”
I had an in-network office visit in December. The dermatologist biopsied four lesions and treated four precancerous lesions with liquid nitrogen. I just received the doctor and lab bills. The copay to the doctor was $80 on the day of the visit. I now owe him an additional $314.02 for his services. The lab charged $544.12 for pathology of the biopsies. That one visit cost $938.14. The really sad part of this story is that I have health insurance and I am scheduled to return to the doctor in February for complete removal of three of the basal cell cancerous lesions and I have several more on my legs which we have not even biopsied yet. How can I afford this medical care without taking money out of my emergency savings account? Isn’t that why we pay for insurance?
I currently pay $210 a month or $2,520 annually for health insurance and my individual in-network deductible is $6,000. My pension check is only $2,055.87 per month. My health insurance coverage (if you can call it that) takes 10.2 percent from my check. I can afford that as long as I don’t go to the doctor.
My mom, age 84, doesn’t go to the doctor to get needed care due to high costs. My late father gave up cancer treatments due to costs and quality of life issues; he chose to die instead at age 80. Am I and others headed toward that same predicament?
I do not want to spend my savings and retirement account on medical bills. That is not why I put money in my 401(k) for 25 years. I invested at least 10 percent of my income so I could travel and enjoy my retirement. With my history of basal cell skin cancer, I can see those life-long dreams disappearing in favor of paying high medical expenses and insurance payments.
Is this situation what the federal government wanted when they passed the socialized medical legislation, Affordable Care Act, and Barack Obama signed it into law in 2010? America used to have the best medical care in the world at a reasonable cost and many people traveled here for treatment. Now, many American citizens, especially retirees, cannot afford much-needed healthcare. Maybe it should be called the Unaffordable Care Act or the No Care Act.
“Open enrollment starts Oct. 15 for people who’ve signed up for Medicare benefits and must buy into or change their supplemental Advantage or Part D prescription drug plans.
The Medicare Rights Center in New York tells me that you can ‘make as many changes as you need during this period’ and that ‘only your last coverage choice will take effect Jan. 1.’
A long list of resources appears at the end of this blog to help Medicare beneficiaries through the enrollment process. But there’s a lot of hoopla around the Oct. 15-Dec. 7 enrollment period, so it’s important to know what Oct. 15 is not about.
One’s birthday – and not a date on the calendar – determines when people should initially enroll in the Medicare program. Most people turning 65 who are not covered by their own or their spouse’s employer health insurance at work are required to enroll in Medicare Parts A and B during a seven-month period that starts three months prior to their 65th birthday. During this seven-month window, new Medicare participants must also sign up for their Part D drug plans – or risk paying a lifelong penalty. Oct. 15 is not the trigger date for selecting Medigap plans either.”
“Needing long-term care is an unpleasant thought as you approach retirement age. But ducking this issue could be the most expensive mistake you make about your retirement.
Aside from the obvious reluctance to think you might need help with basic activities of living, you might figure you’ve saved enough to cover the costs of care. Think again.
According to the latest Cost of Care survey by Genworth, which sells long-term care insurance, it now costs an average of about $3,800 per month for in-house care for a year, a similar amount in assisted living and about $7,700 per month for a private room in a nursing home.
Need for care typically lasts only about two to three years, but extended care for Alzheimer’s could wipe out (your) savings….
According to Home Instead Senior Care, one of the largest franchisers of care-giving services, only about 20 percent of its clients pay for care through long-term care insurance policies. The rest are digging into their own pockets.”
Terry Savage is a nationally known expert on personal finance, the markets, and the economy. Terry is a regular blogger at the Huffington Post. She is a frequent guest on television and radio shows, including CNN, CBS, and she has appeared many times on Oprah.
