Author Topic: Health Care Costs When Retiring Early: Today on CNN  (Read 3677 times)

Rich M

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Health Care Costs When Retiring Early: Today on CNN
« on: May 16, 2013, 10:47:11 AM »
http://economy.money.cnn.com/2013/05/16/retiring-medical-expenses/?iid=HP_LN

Maybe there is some truth to this in a general statistical sense, but the numbers seems suspicious, especially if you consider even if you retire early, medicare is still there at 65.

And the comments are beyond pathetic.

CCN Money has the most inane fluff articles. 

Rural

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Re: Health Care Costs When Retiring Early: Today on CNN
« Reply #1 on: May 16, 2013, 01:48:03 PM »
Their numbers don't even make sense. The difference should be the extra $70k it will cost the early retiree in the ten years until Medicare kicks in (assuming that's accurate just for the sake of argument here). Their chart shows it higher every year for the early retiree, as if those folks can never get Medicare.

No Name Guy

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Re: Health Care Costs When Retiring Early: Today on CNN
« Reply #2 on: May 16, 2013, 02:26:55 PM »
Dang, you beat me to it. 

Yeah, those numbers over there don't add up.

From the body of the article they claim it's $119,600 to cover the time from 55 to 65.

Example - they say that by 75, the 55 retiree will have spent 206,200.  OK...subtract off what they said you'd spend from 55 to 65 (119,600) and that leaves $86,600 that they say the retiree at 55 would spend from 65 to 75.  Well they state the 65 retiree would only spend 50,900 to get to 75.  What the heck?  How is it that changing the retirement age affects how much one spends AFTER retirement and AFTER one is on medicare?




velocistar237

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Re: Health Care Costs When Retiring Early: Today on CNN
« Reply #3 on: May 16, 2013, 02:32:53 PM »
Their numbers don't even make sense.

Inflation? Comparing someone who is 55 today with someone who is 65 today, the costs for the former between ages 65 and 75 will be higher just due to inflation. (This is just my guess. You can check the study if you want: http://www.healthcostinstitute.org/files/Age-Curve-Study.pdf )

What are the health care costs for someone who is 55 today who works until 65? About the same as someone who is 55 today and retires, except the worker is paying for it by working instead of out of their savings. The retiree will, according to the report, spend about $10K/year on health care, which is actually quite a bit less than the health care costs listed on my paycheck at the end of the year. This will require about $250K savings just for health care, if you don't deplete principal. Even if the report is true, I think I can do that by age 55.

footenote

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Re: Health Care Costs When Retiring Early: Today on CNN
« Reply #4 on: May 16, 2013, 04:09:58 PM »
Inexcusable that the article doesn't take into account the Affordable Care Act going into effect January 2014.

Costs will vary by region, but check out the Kaiser ACA calculator for an illustration:
http://kff.org/interactive/subsidy-calculator/

There are no asset tests to qualify for ACA. You must have no employer plan available and be unable to get other coverage. (Which is sadly easy today if you have even a trivial pre-existing condition. I know that will supposedly change with advent of ACA.) This will be a huge game changer for the ER community in the US.

So for these additional reasons, I join everyone else on this thread in calling "BS" on this silly article.

Purple Economist

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Re: Health Care Costs When Retiring Early: Today on CNN
« Reply #5 on: May 17, 2013, 10:14:50 AM »
The qualification for subsidies under the ACA is only dependent on your income and no other plan available you qualify for (Medicare, Medicaid, employer plan).  It does not require a pre-existing condition or being turned down for insurance.  There is currently a pool of money that is for people that have been turned down for insurance coverage, but that will not exist when the ACA is fully implemented.  The ACA is definitely a benefit to early retirees that have a low level of income.

The higher costs are indeed because of inflation in medical care costs.  The authors assume a 5.7% increase in the cost of medical care for 2020 and beyond.  The study is looking at at 55 year old person today and and a 65 year old person today.  With a 5.7% annual increase in healthcare costs, the costs for the 55 year old will certainly be larger when she turns 65 than they are for the current 65 year old.

Another important point to always remember with these studies and numbers is that it is an AVERAGE.  I know for certain that myself and my family do not consume an average amount of health care.  We are far below the average.  Based on my lifestyle and eating habits, I expect that trend to continue.

mpbaker22

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Re: Health Care Costs When Retiring Early: Today on CNN
« Reply #6 on: May 17, 2013, 11:27:42 AM »
What I learned from this article -
It costs $50,900 from 65 to 75.
It costs $206,200 to get from 55 to 75.
Therefore, It costs $155,300 to get from 55 to 65.
It costs $146,600 to get from 65 to 85.
It costs $372,400 to get from 55 to 85.
Therefore, it costs $226,200 to get from 55 to 65.
The article says it costs $119,600 to get from 55 to  65.
$226,200 != (not equal) $155,300 != $119,600
Therefore, this article is the epitome of shitty reporting.

As someone said, I assume inflation is in here somewhere, but if an article is going to write a report like this, they ought to include assumptions.  I'm sick of using online calculators, then realizing they make BS assumptions.