Financial Honesty: Talking Real Numbers

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Audio Financial Honesty

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.

  • Congratulations on reaching such a wonderful age of wisdom and experience! I love the honesty of your post – seeing numbers written down in black and white can be a startling reminder to act now.

    • Carolyn, with that wisdom comes the recognition that these continue to
      be financially productive years, so now is the time to “stretch” with my
      full-time international consulting and my mentoring. Some day I’ll be
      very glad that I did!

  • You have so much wisdom Sharon! Once again a great article. Perfect timing, my husband just got a fabulous new job but it offers no health insurance, so we are off in search of health insurance for a family of 5.

    • Identifying good health insurance for each individual situation is more complex than ever, Angela, mainly because it’s an ever-changing playing field. I know we needed massive healthcare reform, but we didn’t need an additional 2,800+ pages of unclear generalizations, just waiting for tens of thousands of pages of interpretation. What a sad state … Good luck with your search; I know you’ll find what’s best of what’s available!

  • I hope you are writing a book Sharon with all these ideas! I will buy it!

    • I’ve had one written for a couple of years now, MarVeena, just haven’t published it. But I keep thinking that a bunch of these posts could also be organized into a book … maybe in my “infinite free time.” 😉

  • Sharon,
    This is a REALLY important post for people to read, several times! Many people “shop” for health care like like buy a tomato – okay, looks fine, I can make it work. Health care is a critical component to living happily and well.
    Thank you for sharing the numbers since msot people have no idea what they should expect.
    Great piece!
    Warmly,
    Mary Kelly
    http://www.ProductiveLeaders.com
    Author, Money Smart: How Not to Buy Cat Food When You Don’t Have a Cat

    • Thanks, Mary, I had a feeling you’d agree with me. In fact, as I was writing about what I thought could still happen to the U.S. economy, it reminded me of some of your recent comments. More than ever, we have to dig in and understand the numbers that will affect our lives for years to come.

  • Thanks for sharing such an important topic, Sharon. You always make it look so simple…which is a good thing. Ever thought about creating an e-book? I know it would help so many. God bless you!

    • Alexandra, I’ve been doing this writing for so long I get tripped up on what I’d put in an ebook and what I’d leave out. As for making it look simple, it IS when you understand it. Until then, it sounds like so much noise … 😉

  • Great article, as usual, Sharon. My question… Did I understand you to say that you are going to continue the private insurance rather than Medicare? Do you have to take SS before you can get Medicare?

    And, I read a quote about getting older that I love (although I’m not sure of the author).
    “Never regret growing older. It’s a privilege denied to many”

    • Mari Ann, you can take Medicare as soon as you’re 65 (you can actually start the process as early as 3 months before). It’s independent of Social Security, although the same agency handles it. And, as you probably know, if you delay taking SS after you qualify for it, the base amount you lock in increases by 8% per year (actually 2/3 of a percent per month). It tops out at age 70.

      No, I’m dropping my private insurance. It’s just coincidental that AARP uses United Healthcare … and that’s whose policy I had privately. (I figure that, after “giving” them so much money over the years, I should let them pay in the future if I have any needs …)

      Love your quote; it’s how I feel. And imagine how “privileged” both your parents are!

      • Yes, the whole thing with my parents is almost surreal at times.

        About your old policy, I’m just curious why you didn’t go with a REALLY high deductible, since you had the HSA in place. That way, you could have saved more on those ridiculous $1200/month premiums they were scalping you for!

        • Mari Ann, I would run a cost/benefit every once in awhile and it was borderline. For example, two years of “anything wrong” would throw it well into the red, so I decided not to take the risk. You know what an operation costs today, for example … so $1,200 was the cost of my peace of mind.

  • Sally

    You are so right about planning well ahead. Aren’t we lucky to be able to have the security of Social security and of Medicare! The cost of health care varies state by state and hospital by hospital. I am glad these costs are under investigation. The large HMO’s like Sutter Health were required to testify before Senator’s Grassley’s Health Committee. (R. Iowa) Grassley said if you are telling everyone you are a non-profit and getting tax exemptions for everything connected to the hospital included property tax exemptions, you should be providing community benefits at fair costs. (Sutter’s profits last year were in the billions.) 20 states of ended these tax exemptions and all Catholic Hospitals have stopped hiding behind tax exemption and now are for-profit. Based on the Grassley hearings, the IRS has established new guidelines for not-for-profit hospitals. Hopefully the Affordable Care Act will be able to encourage states to control hospital costs so that all citizens get a crack at good care without leaving the country. (Did I mention that I served on the Community Health Commission for a few years and A Sutter hospital was on my watch. )

    • There are so many moving pieces in the healthcare system that need cleaning up, Sally. I, too, am glad they’re at least starting somewhere. But what a massive job. Kudos for doing your part!

  • Holy moly! I complain about my insurance premiums in Canada no more!

    • And it’s going to get worse on private insurance, Catherine, unless effective reforms are put in place that deal with excess litigation, hospital costs, Big Pharma, powerful lobby groups, etc. (Doesn’t sound too likely, does it?)

  • you don’t want to get me started on how angry I get about health insurance! My 93 year old mother-in-law was forced to take a new insurance her cancer treatment drugs are almost out of reach to purchase. She had provate insurance for 35 years that has taken care of everything and now changed on her! uggghhhhhhh! 😉 Thanks Sharon for the honest look at health care!

    • And I can’t tell you how many fellow entrepreneurs are getting bumped off their policies because of all the restructuring, both small businesses and solopreneurs. One solopreneur has found a small program through his doctor’s office … so at least he can afford his meds and basic testing. Now you know, Elizabeth, why I was celebrating reaching the Big Six-Five!

  • Barbara Becker

    Great article Sharon. “Grow old along with me, the best is yet to be, the last of life for which the first was made.” a Robert Browning quote that we put on my parent’s 50th wedding anniversary bookmarks, that were given to each person who attended the party we 5 children gave them in 1991. We also gifted each female a red rose to take home.

  • Excellent article, Sharon. Thank you for being so transparent so that others may learn. I appreciate your honesty and for walking your talk!

    • When I started writing, Robin, I decided that transparency is what would separate me from so many in the blogosphere. (That and a bunch of financial experience and education.) And, since I don’t believe that our net worth is representative of our worth as a person, I’m just living what I believe. And talking about it. 😉 Glad you find it useful!

  • Leslie Yerger

    This is great info. So many people don’t even understand whether they can say they have financial freedom or not – so important what you do. It’s all complicated and keeps changing!

    • It does keep changing, Leslie. But it’s actually less complicated than it’s made out to be. Part of the problem is that we’re not given a good foundation as kids, so we have to do a bunch of “catch-up” as adults. But it’s all do-able!

  • Tom Holmberg

    what a great service Sharon. I know a lot of people who could learn to save money for the healthcare savings account. Thanks for sharing your story

    • You’re very welcome, Tom. I know you know that I write “to” women, but all of this pertains to men as well. You all just got a bit more “real information” growing up than we did!

  • What an honest article. Thank you for sharing.:) It sounds like you have thought through all of your financial respionsibilities thoroughly!

    • It’s what I realized was needed to catch up after not dealing that carefully with my money … and with my financial future … for so long. Now it’s almost like a mission, Dani … wanting all women to do the most they can to reach financial security and stay there!

  • I love this article Sharon! I also love your comment about living with *financial honesty* – it’s an important piece no matter what situation we are in.

    • That honesty is even more important the worse off we are financially … because it’s a foundational part of getting ourselves out of our mess!

  • Financial honesty is a very important conversation

    • Especially when it’s the conversation we’re having with ourselves, Carly!

  • Love your transparency, Sharon. This post certainly made me think hard about this subject — and that’s always a good thing. Thank you!

    • Happy that it gave you a reason to “invest” the time in the topic! It’s so easy to sweep this one under the rug, but that can be a costly proposition.

  • Martha Giffen

    Getting “real” about numbers is very hard for many. Thanks for your honesty on this blog. You are helping others in a big way!

    • Thanks, Martha, that’s my intention anyway. The more women I can get thinking about the topic, the more that will keep going until they’ve pushed themselves to financial security and peace of mind. Whew! 😉

  • Thank you so much, Sharon – this is much needed information for women my age (and men, of course). Very much appreciate you breaking it down like this!

    • Glad you thought it was useful, Lisa. The whole Medicare sign-up process had been presented as so terribly complicated. But once I started sorting out the pieces, it was actually very straightforward. Maybe I’ll write a simple step-by-step ebook guide … 😉

  • Liz Bigger

    Great Post Sharon!!! Thanks for sharing it!

  • Lorii Abela

    Good to know and
    plan what will come, financially, ahead of time. Thank you for the honest
    post and sharing your story. Looking forward for more tips.