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Do you remember when you turned 18? Remember how excited you got? Or maybe it was 21. In any case, you became “legal” in some new way, whether it was the legal voting age, or drinking age …
Well, I was as excited about turning 65 recently.
You see, it’s all about healthcare.
I’m a solo entrepreneur. And although I have absolutely no health issues, I live in a state (Florida) where we carry the burden of a large older population and a high percentage of illegal residents. (I once had my brother, who lives in Idaho, get a health insurance quote for someone with exactly my demographic profile and, at that time, the premium in Florida was nearly three times the premium in Idaho for the same insurance.)
When I lost my business and my house at age 53, I also lost my health insurance. I went “bareback” for a few years as I rebuilt my life. But for the past eight years, I’ve had good health insurance. I’ve had a $2,800 annual deductible that I’ve never exceeded, so the insurance company has paid for nothing. And, the premium that started around $600 a month? It has stair-stepped up each year. And it has skyrocketed in the past two years (thanks to just the hint of Obamacare) to around $1,200 a month. I’ve paid a total of $81,600 in premiums over those eight years.
I also added a Health Savings Account (an “HSA”) to the policy, so I paid an additional $2,800 each year into an account similar to an IRA, but usable only for health-related expenditures. Most people stop after paying in the first $2,800, once they know they have enough to cover the high deductible. But I kept adding $2,800 each year. About money, they say, “Out of sight, out of mind.” It was like a forced savings account. There were months when it really strained my finances, but I always found that payment somewhere. And I never touched the account.
Today that account has about $22,000 in it.
Medicare to the Rescue!
Now … ta-dah … in comes Medicare. I’m so excited I could set off fireworks!
For a top-rated plan through AARP and United Healthcare (my old insurer), my monthly payment will be about what I used to put into the HSA. (And the $1,200 monthly premium goes away.)
I was going to pay that Medicare premium out of the HSA, because it qualifies as a health-related expenditure and protects the tax-free status.
But I’m not going to do that. I’m going to “find” the premium as I always have.
And I’m not going to take Social Security until I absolutely have to … at age 70 … when my monthly check will be set as high as it possibly can be for the rest of my life.
Why, you ask?
Because I don’t know what Obamacare is going to do to costs, including for Medicare. And I don’t know what’s going to happen to Social Security. And I don’t know what’s going to happen to inflation … and our currency … and our stock market … and the price of gold … and everything else.
Since nothing in our economy is following any of the traditional theories of economics, we may be fine in the long run. Or we may not. Things could still go really wonky, especially since we’re so interconnected with all the other countries’ economies.
And I don’t want to do anything to jeopardize my long-term financial peace of mind. As you know, that’s my mantra. My sacred space.
I’m willing to make some more sacrifices today … not taking the easy way out … to ensure that.
Why the Financial Honesty?
Why am I sharing all this with you? For two reasons:
1. Because, whatever age you are, know that one day you’ll be doing these same calculations, so you may as well start early, getting a head start on when I finally got serious, well into my fifties.
2. Because I keep telling you that you have to get comfortable with numbers, living with financial honesty and free of any judgment based on what the numbers are. Most everyone else talks in hypotheticals, not willing to give you real examples. I’m just walking my talk.
My hope is that by seeing someone’s actual numbers, concerns and actions, it will trigger a thought or two about your own.
Let me know in the Comments section below if it did.
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Bio: Sharon O’Day fixes financial lives. She is a tell-it-like-it-is money expert with a successful career in global finance, plus an MBA from the Wharton School. Today she specializes in getting entrepreneurial women over 50 back on their game so they can have more money, less stress and more joy. With her “Over Fifty and Financially Free” strategies, they take actions that lead to their ultimate goal: financial peace of mind.