Carolyn McClanahan, a contributor at Forbes.com, doesn’t mince words: “Planning for a traditional retirement is a fallacy.”
She then turns the screw: “Planning for healthcare costs takes that fallacy up a notch.”
The point that McClanahan wants to make is: None of us are probably saving correctly for healthcare costs. This effects us as people who need to save; and it also effects those who work in business end of healthcare. People can’t pay for the services they need if they don’t have the money for it.
McClanahan says there are three factors that make planning for healthcare spends challenging:
We don’t know when we will get sick and have significant expenditures on healthcare needs.
Costs are usually shared with a third party payer, and the rules of what they pay for are frequently changed.
Pricing of healthcare services is notoriously opaque and it is difficult to shop around. Once illness strikes, this task becomes almost impossible.
With all of that in mind, McClanahan suggests the following:
Understand your health risks
Plan an approach to healthcare
Make certain everyone involved in your healthcare understands your wishes.
In wrapping up, here’s how McClanahan suggests we save for healthcare:
Save for the true needs first – food, shelter, and transportation. A good fee only financial planner can help you calculate that amount. Once that bucket is full decide on the next goal – a. healthcare or b. the “wants” that are expendable.
For healthcare, if you are a high health user, make it your goal to save the higher amount of the Employee Benefit Research Institute’s numbers. Once you reach that goal, take stock of where you are – how much you dislike your job versus how happy you will be having only your needs and healthcare expenses met. I tell people at this point, “If you hate your job, find another one doing what you love.” Income from a lower paying job can take care of the “wants” while the needs are being met through savings.
If you want more than the “needs” and healthcare met, and you like your job, put a dollar value on the “wants.” Again, a good financial planner can help you do this. Once that bucket is full – then you can work for fun or totally hang it up. However, if you hang it up too young, you will be at the mercy of what the world delivers. All in all, your ability to work is your safest asset.
This Metaphor is the Dementia of Bad Headlines: “Health Care Is the Diabetes of Our GDP.” Though, as Dr. Jordan Shlain says right up front, he’s a primary care doctor in San Francisco and Silicon Valley.
“What Do We Want! When Do We Want It!”: “Despite a looming strike next week, there was no last minute deal struck in the last bargaining session between the Motion Picture and Television Fund and the union that represents the healthcare workers at the Wasserman Camus in Woodland Hills and other facilities.”
“Paul Ryan’s Budget Won’t Help Healthcare”: “But what you’re going to find soon enough is that many people, the average health-care consumer, may not even care. According to a recent study in the journal Health Affairs, people willingly drive across town to save 50 cents on a carton of milk. But when it comes to health care, they don’t want to think about how much it costs, and they don’t want their doctors to think about it either.”
Wasn’t I JUST TELLING YOU GUYS That Things Are Weird in Bangor, Maine?: “A local board-certified gynecologist who operates three medical facilities for women’s health has agreed to pay almost $300,000 to settle a federal complaint over improper billing of Medicare and MaineCare.”