Author Topic: the 'stache vs late in life health care costs - wondering how this works out  (Read 8123 times)

cthulhu

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Hi,

I'm figuring out the joys of being a new mustachian, and there's a basic reality I don't know how to work into the MMM-thinking/planning.

My grandma, who lives in a comfortable but not extravagant assisted living facility, and has for about 5yrs, requires between 6-7k monthly - all for the cost of the facility/medicine/health aide type stuff (aka she is not eating out or buying expensive cars).  The family is quite worried as she's down to her last 500k, which if she lives to be 100 is not going to last.  Her "last" pile of money is the same as is being recommended for the start of FI and it feels like this would create a math problem post age 90 that will be hard to resolve.

Are MMM's mainly dealing with this via long term care insurance, or are there other specific remedies being put in place to cover late in life living and health care expenses or is medicaid a larger part of the plan than i would anticipate after FI?

Al

smalllife

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Personally, I donít think that future generations should expect to receive the same type as care as the current crop of senior citizens.  The cost is too much for the healthcare system to sustain.  I fully expect that by the time I get to that age the system will have reinvented itself, but Iím not sure exactly how it will do so.  I will save as much as I can, take care of my health, and hopefully live by my principles and not spend hundreds of thousands of dollars extending my life.

atxian

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No experience with this so interested in hearing others...

Not sure if your question is really MMM specific because 6-7k a month per person is pretty unaffordable under any kind of retirement scenario. How do non-MMM people afford it? The majority of people enter retirement with just SS income to fall back on. So it seems like there will be either cheaper options for care or maybe people just go without assisted living or rely on family.

cthulhu

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You've hit the nail on the head with the concerns there - i know spending 6k/mo isn't mustachian on its face but the way she's ended up here is and that's why i keep tripping when i say things like, oh i could hit FI in 10yrs - well how could i with this sort of cost looming...

To be clear - this is not a wealthy woman, nor is anyone in my family.  The money she has is the result of a lifetime of 1 income (husband - now deceased), managed frugally with much living beneath of means.  She doesn't have any expensive tastes, she never buys anything, and if you buy her something that she knows is over $20 you've wasted money and she thinks its far too nice.  She has been blessed with health and longevity, and this is what it seems to cost to just maintain a decent standard of living. 

This feels like the situation anyone could end up in if they have a relatively long life that requires some assistance in a long period of old age. 

Are the numbers thrown around for the 'stache just not equipped to handle this type of old age or am i missing something basic?  i know at times MMM has said that planning for the outlying events is not a practical use of money (the insurance posts etc) but old age money seems on the side of responsible planning not doomsday fear-mongering

ashem

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I'm interested in what others have to say too. I know from my grandmother's experience in a nursing home that if you have money, you will be charged thousands of dollars each month for your stay. If you don't have money, medicaid provides coverage. I've always thought that if you have savings to protect, you should look into getting long-term care insurance around the age of 55.

Erica/NWEdible

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My grandma was in the same situation for memory care facilities. $6000 or more per month isn't extravagant at all for that kind of thing. If you end up in the ICU you're looking at $10,000 a day. All the incentive for a hospital or care facility is to do more, test more, prolong and defer the inevitable.

This is my big concern with ER type things too, though honestly I'm not sure hanging on at a job for 20 more years would make a difference...I'm not sure anyone can expect to save their way into a stash big enough to outrun medical bills if the worst happens.

The US medical system is totally crippled, costs are out of control, end-of-life care is a huge percentage of where the national health care dollar goes, much of what is done is pointless, some is outright destructive. This issue WILL need to be addressed in the next 20-30 years, one way or another. I fear it won't be really pretty when it is.

A few serious articles about this topic:
http://www.thedailybeast.com/newsweek/2012/05/27/why-did-her-husband-s-end-of-life-care-cost-so-much.html
http://www.cbsnews.com/8301-18560_162-6747002.html?pageNum=2&tag=contentMain;contentBody

My favorite (satirical) article about this topic (really worth reading):
http://www.theonion.com/articles/world-death-rate-holding-steady-at-100-percent,1670/

JohnGalt

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I find it really hard to believe that it can't be done for a lot less than $6,000/mo... but, assuming that is what the costs would be let's walk through what my thought process is as a 27 year old with a life expectancy of 84 years. 

My goal for early financial independence is to save $200,000 for "old age" retirement by age 30.  If this grows at a 4% real growth rate (I'll use real growth for everything so I'm ignoring inflation entirely) until age 60, I will have $650,000 in today's dollars.  This will allow me to draw $30,000 / year until age 86 (2 years past my life expectancy) at a 87% success rate according to firecalc.  Add whatever amount of social security is still around when we get there to that as a safety cushion. 

If I change that scenario to assume that I live until 100 and from 90 on I need to draw $72,000 / year ($6,000 / mo), I now need to have $800,000 at age 90.  This means I need $1,450,000 at age 60 to cover my old age retirement (that's what I need to have an 87% success rate to still have $800,000 when I hit 90).  To get there, I'd either need to save an additional $250,000 by age 30 or, more likely, would need to save longer.  At $25,000 / year savings, it takes an additional 13 years to save enough that it will grow to $1,450,000 by age 60.  At $50,000 / year savings rate, it takes 6 years. 

Keep in mind those figures are just for my "old age" retirement.  It doesn't count what I need to save to get me from whenever I want to stop working to age 60. 

So my conclusion... I'll take my chances of not being able to afford the extra care for ages 90-100 if that means that I save 6-13 years of working in my 30's or 40's.


Snow White

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I don't have the answer either but as a Registered Nurse I routinely see families devastated by unexpected medical expenses.  An option (not necessarily a good one) is that when/if your grandma runs out of money she MAY qualify for care in a nursing home under Medicaid but only if she has a medical need that would "qualify" her for nursing home care.

Assisted living is only available for those with private resources.  Private insurance and Medicare doesn't pay for it.  The burden generally falls on families to care for the dependant elders.

bogart

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I'm sorry to hear that your grandmother's situation is looking financially precarious; that sounds difficult.  My dad's similarly situated but unlike (it sounds) your grandma, he has health issues (dementia, wheelchair-bound) that both make it necessary for him to live in a nursing home (not assisted living, something with regular skilled nursing care) and eligible for Medicaid -- which is a good thing, as he has no other means to pay for his care.  Like your grandma, his runs about $6k/month; that provides a semi-private room + care; of his income -- he does have some, around $2.5K/month -- he's allowed to keep $30/month to pay for incidentals such as telephone service, clothes, and, well everything else not included in the care provided by the facility; the rest of what he gets goes straight to cover a portion of the facility's rent, as required by Medicaid, which then picks up the rest.  Bluntly, it's not a way/place anyone would choose to live if they had other options available.

I have concerns about the MMM approach similar to those you raise (as I'm not taking the MMM approach to FIRE, they're not really personal concerns, just general ones).  Options available besides saving a (bigger) bundle to address this concern might include longevity insurance, a relatively new product that, as I understand it, is basically a fixed annuity with a long deferral between purchase and payout; you might buy it at 50 and then it will start to payout once you are 85 -- so you are providing a lump sum in exchange for an "in case" guarantee.  Of course you are also hoping the firm you invest with remains viable, etc. etc.  Buying into a retirement community with a range of care facilities open to residents for a fixed fee is another (also expensive) option.  Long-term care insurance is too; its usefulness may depend on (besides other things) how well the plan you pick meets your needs if/when they arise, e.g. not all plans cover assisted living (as opposed to nursing home care), inflation protection may be inadequate, in-home care may not be covered and so forth.

Other options, such as thoughtful home design (accessible, good location accessible to public transportation that can accommodate those with limited mobility) and a strong social network could be relatively more affordable approaches to minimizing such risks.

My personal take on this is that a much bigger 'stache than is often aspired to around here is a good idea, but then, I'm a lot more risk-averse than the MMM approach typically advocates.

MooreBonds

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My personal take on this is that a much bigger 'stache than is often aspired to around here is a good idea, but then, I'm a lot more risk-averse than the MMM approach typically advocates.

+1

Personally, I also have concerns about many posters assuming a 4% withdrawal rate on a very modest portfolio lasting from age 35-???, given that the 4% SWR fails on horizons longer than 30 years, in addition to the uniqueness of the US financial markets from 1900-now, compared to SWR for most other countries in the same timeframe....but I suppose that's for another thread.

I know some in the forum assume they can call it quits at 30, 35, or 40, and can easily pick up a job waiting for them at age 55 or 60 if the portfolio fails. Don't know what they assume for budgeting on old-age allocations, and what their backup plan is for portfolio failures when they're 65, 75, or 80 (especially when they have next to nothing coming in from Social Security due to a very short earnings history). Perhaps another example of posters in their 20s/30s who lack certain life experiences to favor a more conservative plan, due to not having seen a parent/grandparent go through a year or two of even lightweight medical assistance that wasn't cheap?

Yes, it's true that many people in the past made it on far less, and I'm not suggesting that everyone must have $5 million to have any hope for retiring and living to 90.....but try finding a nurse's aid these days that will be at your home when you need a little help for a price that will fit your proposed retirement budget. And you are correct that someone who is needing nursing care won't need their budget to pay for many other things, like a trip to Hawaii, or to buy a replacement car, or to upgrade the PC. However, there can very well be a period of time before you qualify for Medicaid, and before you move into a nursing home, where you would need some assistance with things.

Expecting your children to be there for you after you work for just 15 years and enjoy the life of Riley from age 35-80? Do you really think they will work a job, take care of their families, have a tiny bit of enjoyment of their own life AND take care of their live-in 80 year old parent out of their own savings because their parent worked a few years, spent the majority of their life retired...and when the time came, their portfolio shot craps due to very aggressive assumptions?

As with the "how much do you need to retire" thread, if someone is fully knowledgeable of the limitations at age 75/80/85 of having a very modest portfolio at age 30, more power to them....but I would suggest that they haven't spent some time truly imaging what life would be like at age 80 with no options, and they also probably haven't spent much time around an older relative going through that. If you have spent time with them, that's very honorable of you...but I would then wonder why you still take an overly aggressive view of funding similar care for yourself when at that age.

My goal is to retire on a 3% SWR (primarily funded from dividends), so healthcare in the later years should be able to be funded without many worries, given that I won't likely have many other needs at that point beyond my simple creature comforts and someone to assist my daily living.

RadicalPersonalFinance

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Her "last" pile of money is the same as is being recommended for the start of FI and it feels like this would create a math problem post age 90 that will be hard to resolve.

Are MMM's mainly dealing with this via long term care insurance, or are there other specific remedies being put in place to cover late in life living and health care expenses or is medicaid a larger part of the plan than i would anticipate after FI?

In general, most MMMs are probably not preparing for it consciously with accurate financial forecasting; however, the lifestyle attributes of an early-retirement lifestyle would lead people to be more prepared than many others.

By retiring early, MMMers are forced to continue to be engaged with life without having work as an outlet. Life engagement seems to have some impact on the chances of needing extended care.

Hopefully, by having more time to maintain physical health, MMMers will stay healthier for longer as well.

From a financial standpoint, it would be important to do accurate financial forecasting.  For the typical 'Stache, long-term care insurance or the divestiture-of-assets-into-a-Medicaid-trust plan would be mandatory.  The 'Stache goals I read about here in the Forums are simply not large enough to self-insure as you've learned with your grandmother.

But, perhaps the fact that you haven't institutionalized your children means that they, in turn, won't institutionalize you!  That would be my preferred are to focus on.  Build up structures of social support and supplement it with some long term care insurance.


Another Reader

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+1 for MooreBonds' comments. 

In general, I think the younger posters here lack a frame of reference that is generally acquired over time.  Optimism and invincibility are tempered by experience.  Making rash decisions about minimum retirement portfolios at an early age is unwise in my experience.  I know plenty of older folks whose assumptions about inflation, interest rates and investment returns made in the 1980's led to difficulties today.  Those folks won't be going back to work at this point in their lives.

The MM's are still earning significant income (or at least MMM is right now) in their late 30's.  As I understand it, they are living off current earned income and rental income.  That means they are hedging against future investment losses by allowing their asset base to grow. 

My observations over the years say I need more than a portfolio that will decumulate to nothing over some number of years according to one or more models.  My future SWR at this point is based on net rental income and pension income with no decumulation.  Social Security will be a nice bonus.  Pension income and Social Security have risks, but over time, the rental mortgages will be paid off and those risks will become less of a factor.

JR

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One thing to keep in mind is that most mustachians will likely earn some sort of income after they 'retire'.  Even if you retired at 35 and worked very part time saving $10k/yr until 65 you would have an additional $664k (today's dollars) in funds (using the last 10 years real return of a simple 50/50 stock/bond index portfolio).
« Last Edit: October 23, 2012, 08:17:52 AM by JR »

bogart

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My grandma was in the same situation for memory care facilities. $6000 or more per month isn't extravagant at all for that kind of thing. If you end up in the ICU you're looking at $10,000 a day. All the incentive for a hospital or care facility is to do more, test more, prolong and defer the inevitable.

This is my big concern with ER type things too, though honestly I'm not sure hanging on at a job for 20 more years would make a difference...I'm not sure anyone can expect to save their way into a stash big enough to outrun medical bills if the worst happens.

The US medical system is totally crippled, costs are out of control, end-of-life care is a huge percentage of where the national health care dollar goes, much of what is done is pointless, some is outright destructive. This issue WILL need to be addressed in the next 20-30 years, one way or another. I fear it won't be really pretty when it is.


(emphasis added)

Not to downplay the issues you raise, which I agree are real and serious, but I think it's important to recognize that the kinds of circumstances being discussed here are not unique to people with "serious health problems" or who have experienced "crises."

To take my dad as an example (since I reference him above in my reply to the OP), 8 years ago he had a stroke due to undiagnosed/untreated atrial fibrillation.  Fortunately the stroke was caught quickly (basically immediately) and treated effectively, resulting in an ER admission, 4 days in the hospital, ~2 months in a rehab facility, and a resumption of his regular life, living independently and managing a small business.  Oh, and life-long use of Coumadin, a product that's been used as a blood thinner to reduce stroke risk longer than I've been alive. 

That circumstance continued until 3 years ago, despite his increasing frailty and confusion -- he continued to live independently, continued to run his business, continued to refuse to consider that he might need to re-evaluate and change anything about his situation.  His stroke had left one side weaker than the other and affected his balance, but not to a point where he couldn't function.  Then he fell one night, alone (in the wee hours of the morning, in his bedroom -- nothing nefarious), and may have spent as much as 24 hours on the floor before he was discovered, uninjured but dehydrated/confused.  Another ER admission and another 4 days in the hospital allowed him to recover from the stress of the fall, etc.; tests turned up no obvious medical problems, but it was agreed (not by him) that he was developing dementia.  The stress of these events (fall, being unable to get up, hospitalization, cognitive decline) left him more frail and barely able to walk independently, but not "sick."  He was again released to rehab and subsequently moved to an assisted living facility.  While there, he fell and broke his hip, underwent surgery, and has never regained the ability to walk.  Thus is it that he now lives in a nursing home; he cannot get himself in and out of bed, or in and out of a wheelchair, he has to be lifted.  Basically this is a combination of age + weakness + the cognitive declines associated with dementia.  But, to be clear, he knows who the president is, watched the debates, and has opinions about current events.  His clarity comes and goes, but he is far from incoherent and unaware.

I completely agree with you, philosophically, about the quality of life issues (my father, however, does not).  But even if he did want to "end it all" (and after all, every one of us is "deferring the inevitable" every time we drink a glass of water or take a breath...), it's not entirely obvious what "dramatic" intervention he'd forego.  Certainly, he could quit taking the blood thinner and would then probably have a stroke and could refuse treatment and die from that (not necessarily quickly, I don't think; untreated, his earlier stroke would probably have left his left side paralyzed, but would not, I don't think, have killed him).  In his current state, simply refusing to lift him in-and-out of bed and to bathe him and so forth would kill him pretty quickly (albeit horribly) from bed sores and resulting infections, and obviously, if someone weren't preparing and providing his food, he'd starve (or die from dehydration). 

And of course, that's just one case -- an anecdote, not data.  But it is not the financial impact of developing-some-horrid-disease-in-my-dotage-and-not-being-able-to-get-treatment that worries me, it's the gradual-declines-and-slow-incompetencies and their implications.
« Last Edit: October 23, 2012, 09:55:38 AM by bogart »

Mactrader

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I don't have a lot to offer to the very interesting discussion, but I haven't seen anyone mention selling of real estate that can help finance the end-of-life care. When you are entering a facility like this, you will no longer need it and many MMMians have MULTIPLE properties that either could be liquidated or continue to provide rental income. Your remaining stash + Social Security + boost in your portfolio from sale of real estate assets MAY bring you over the finish line. This conclusion came from zero math, so that could be helpful if someone took the time to do just that!

cthulhu

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Your remaining stash + Social Security + boost in your portfolio from sale of real estate assets MAY bring you over the finish line. This conclusion came from zero math, so that could be helpful if someone took the time to do just that!

Do folks in MMM actively consider social security to be a part of their longterm plan?  Given the desire to hit FI pretty early I would assume that most folks are going to get very low SS payouts as their 30yr working average is going to have a lot of zero or low earning years included.  I, personally, have it included in my retirement figures at 50% less than the govt site currently estimates and even then i feel like i'm being optimistic, and i'm assuming I will have the 30 yr work history in those plans.

JR

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I don't have a lot to offer to the very interesting discussion, but I haven't seen anyone mention selling of real estate that can help finance the end-of-life care. When you are entering a facility like this, you will no longer need it and many MMMians have MULTIPLE properties that either could be liquidated or continue to provide rental income. Your remaining stash + Social Security + boost in your portfolio from sale of real estate assets MAY bring you over the finish line. This conclusion came from zero math, so that could be helpful if someone took the time to do just that!

A lot of the fear and criticism that surrounds a Mustachian lifestyle is that someone who retires early will always follow a "conventional" retirement of spending down their wealth and earning no additional income.  I think it is safe to say that most Mustachians are not going to immediately retire from all income producing activities as soon as their investments produce the exact dollar amount of their expenses.  MMM is a good example of this, he is financially free but still his net worth is still appreciating faster than inflation.

skyrefuge

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I think posters ahead of me have astutely mentioned that facing a decade or more of $6000/mo living expenses is not a Mustachian problem, it's an 'everyone' problem.  It's not like Mustachians are the only ones at risk reaching that point without a sufficiently-large stash (in fact, I bet Mustachians would be *better* prepared than the general population, who tend to have very little saved). 

Furthermore, that burn rate is so big by Mustachian standards that it can't even really be addressed financially within a Mustachian framework.  Adding another year of work to your plan isn't going to make a difference in being able to handle it or not.

The millions of old people that continue to exist despite the fact that they don't have $6000/mo to spend proves that this problem has already been 'solved'.  If you don't have the money for a $6000/mo assisted-living facility (or when you run out), public assistance (Medicaid) takes over.  Or you stay with family.  Or you refuse to leave your home and accept any assistance and die from a fall and a broken hip.  Your life probably isn't as fancy (and maybe not as long) if you have less money to spend, but this isn't substantially different than early-life Mustachianism, where your life isn't as fancy as your BMW-driving new-restaurant-every-night neighbors.

For me, by the time that I'm old, I'm hoping that our ridiculous and hideously-expensive cultural fear of death will have been forced through a major adjustment, and that it will be totally normal, mainstream, and inexpensive to order an End Your Own Life Kit from Amazon.  If I get to the point where I'm old and require $6000/mo to live and no longer have the money for it, that sounds like a pretty crappy life, with no real reason to continue dragging it out.

Would you rather work an extra 10 years between age 40 and 50 to (maybe) guarantee that you'll be able to pay for someone to haul you and your rotting brain in and out of your wheelchair from age 90 to 100, or instead have that 10 years free in your 40s to do whatever the hell you want, and be perfectly happy if the end comes at age 90?  I sure know which I'd choose.
« Last Edit: October 23, 2012, 10:41:29 AM by skyrefuge »

rationaloptimism

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Okay, let me add a bit of harshness to this.

$7000 a month in "assisted living" is a luxury on par with owning a McMansion, luxury cars, carrying credit card debt, etc.  That cost is MORE THAN DOUBLE the average PRE TAX INCOME in the United States.

The fault in the logic is the notion of "what we deserve." 

The truth is, people get old, they start to decline physically, and then they die.

This has been happening for as long as the human race has been around.

The idea that each of us somehow deserves round the clock 24/7 medical care for YEARS on end just because we get old is a flawed idea.  The only people who had that in antiquity were the pharoahs! 

Each of us is special, each of us is important, but it's not true that each of us deserves a McMansion and it's not true that each of us deserves to LIVE in the same BUILDING with DOCTORS for years on end.  When you need a doctor, go to the doctor.  But you don't need to have your own full-time doctor with you 24/7!

The United States is one of the richest countries in the world, and the ENTIRE economy isn't big enough to support this kind of luxury for elderly Americans alone. 

There are two issues here--one, we're all spoiled and we think that certain really expensive things are "non-negotiable" for us.  (Of course I deserve an expensive college degree, my own house, a nice car, etc.) 

And two, the health care industry in the United States is corrupt and broken, so the prices are unrelated to the costs of providing the service.  We shouldn't just accept that a cot, a sullen guy to tell you when to take your pills, and a nurse walking the halls is a service worth $72,000 a year *per person* (again, more than double the total INCOME per person in the U.S.).  It ain't worth anything like that.  That's just the price in the US (the costs are much much lower in *all* other nations.)

There are many other options--spouses, children, family, friends, can take care of each other.  You could hire the equivalent of a babysitter to swing by for one hour a day for $10 to make sure we're eating, haven't fallen over, don't need a doctor today, etc.  For those who really want to spend a big chunk of their entire life's earnings on this kind of attention, you can even hire a nurse's aid to live with you for MUCH LESS than the cost of one of these assisted living facilities. 

If you have $100,000 earmarked for old-age health-related extras, you're fine.  You're in better shape that almost every human who has ever lived and died.  But you have to be smart about how you spend it.  You can't just move into an expensive nursing home and sign up for the $50 a month cable TV package as an extra.  You have to be thoughtful.  But if all we need is our bedpans changed and we can't figure out how to get that done for less than $72,000 a year, then apparently we're all planning to revent to wild anti-mustachianism when we get old. 

The good news is, all of this will be resolved before most posters on here get old.

The current system is a rip-off, resulting from special interests successfully lobbying Congress for exemptions to anti-trust laws.  That's why health care spending as a percentage of the economy is twice as expensive in the US as anywhere else in the world, and with worse results.  Both parties are in on it, both are dedicated to protecting ever-expanding profit flows to Big Pharma, HMOs, insurance companies, etc. etc. 

But, the entire American economy and government will collapse, utterly collapse, within about 15 years if health care inflation increases at the same pace it has been for the past 20 years.  It's simple math--health care spending will double and double again within 12 years at the current pace--at that point health care spending would be about 50% the size of the entire economy, about 3 times the size of ALL federal government revenue, and about 7 times the size of all corporate profits in the entire economy.  And all those calculations are just based on continued price increases.  When you add in the fact of the baby boom generation dramatically increasing the number of people in the senior citizen bracket?  Fuggedaboutit.  If something can't continue indefinitely, it won't.

So, plenty of alternatives will be developed of necessity by the time we need them.  Bed pan changing will drop back to its natural cost level of about 8 bucks an hour. 

This concludes my rant.  Obviously people are welcome to trade off extra years of life to build up more security for the future.  But keep in mind that "the system" wants you to do this.  It wants you to work until you are 65, save some assets, and then pay them all back just for the privilege of your existence.  Be free!  What's the point of saving up if you're planning to be fleeced out of it all at home.

Mactrader

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Do folks in MMM actively consider social security to be a part of their longterm plan?  Given the desire to hit FI pretty early I would assume that most folks are going to get very low SS payouts as their 30yr working average is going to have a lot of zero or low earning years included.  I, personally, have it included in my retirement figures at 50% less than the govt site currently estimates and even then i feel like i'm being optimistic, and i'm assuming I will have the 30 yr work history in those plans.

Fair point, I don't particularly look at SS in my plan, but I felt as if it were worth mentioning as people are in various parts of their career. If they embrace the MMM in their 40s and retire at 50, they will still get a modest check from SS.

A lot of the fear and criticism that surrounds a Mustachian lifestyle is that someone who retires early will always follow a "conventional" retirement of spending down their wealth and earning no additional income.  I think it is safe to say that most Mustachians are not going to immediately retire from all income producing activities as soon as their investments produce the exact dollar amount of their expenses.  MMM is a good example of this, he is financially free but still his net worth is still appreciating faster than inflation.

Definitely. But it seemed as if it were implied that even with this extra income while in early retirement that it wouldn't be enough or suitable to cover the years where you're unable to earn the side income.

JohnGalt

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Do folks in MMM actively consider social security to be a part of their longterm plan?  Given the desire to hit FI pretty early I would assume that most folks are going to get very low SS payouts as their 30yr working average is going to have a lot of zero or low earning years included.  I, personally, have it included in my retirement figures at 50% less than the govt site currently estimates and even then i feel like i'm being optimistic, and i'm assuming I will have the 30 yr work history in those plans.

Fair point, I don't particularly look at SS in my plan, but I felt as if it were worth mentioning as people are in various parts of their career. If they embrace the MMM in their 40s and retire at 50, they will still get a modest check from SS.


Just plugging in my actual earnings numbers to date (age 27) and numbers for planning to work full time until 30, going 2/3 time until 35, then half time till 40.  My benefits at age 62 are still estimated at just under $1,000/mo (in today's dollars).  I typically use half of that in my planning - but $500/mo can make a difference. 

tooqk4u22

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There are two competing issues in this thread - health care and long term care - they are distinctly different. 

The OP seems to be asking more about the long term care part.  As others have indicated, privately run assisted living facilities are not "right" they are a luxury afforded to those who have the resources, or family has the resources, to fund such care.  Those less fortunate are relegated to being taken care of by family members or subsidized housing or nursing homes...the environment, quality of care, amount of space, etc. most likely won't be on par with these private facilities, nor should they be. This is a classic mismatch of expectations vs. resources.

To those who think that $6-7k/month for assisted living care is a lot, think again.  These are specialized facilities with specialized staff....it is expensive to run and they also need to make some money.  Think about it this if you needed to hire a full time nursing aid to take care of your mom while you are at work - that alone would cost you $40k a year and that is in your house.

bogart

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... it's not true that each of us deserves to LIVE in the same BUILDING with DOCTORS for years on end.  When you need a doctor, go to the doctor.  But you don't need to have your own full-time doctor with you 24/7!


Again, taking my dad's facility as an example, please rest assured that he doesn't.  I believe there is a doctor in the facility roughly 8-5 on weekdays, and not otherwise.  Obviously the doctor isn't sitting around twiddling his thumbs during those times, but rather, seeing patients.  Rest assured, this is billed and not included in the cost of the facility.


... You could hire the equivalent of a babysitter to swing by for one hour a day for $10 to make sure we're eating, haven't fallen over, don't need a doctor today, etc.  For those who really want to spend a big chunk of their entire life's earnings on this kind of attention, you can even hire a nurse's aid to live with you for MUCH LESS than the cost of one of these assisted living facilities. 

... if all we need is our bedpans changed and we can't figure out how to get that done for less than $72,000 a year ...

Bed pan changing will drop back to its natural cost level of about 8 bucks an hour. 

Let's pause and think a minute here.

A person who needs a bedpan, does so because they cannot get out of bed.  That's my dad.  He needs someone on call 24/7, so taking your figure of $8/hour, we've got a cost of $5,760 per month for one bed-pan changer who works around the clock.  Presumably one bed-pan changer can handle more than 2 people (my dad does routinely have to wait for care, the facility being overstaffed does not -- in my experience -- seem to be a problem), so we can reduce that cost, but we have not accounted for rent, utilities, food (including food prep and cleanup), liability insurance, any medical attention, cleaning and disinfecting the living quarters themselves, or any special equipment such as wheelchairs and hoists (my dad is a big man -- I don't mean fat, he's not, but the average caregiver in the facility, who is herself a 50+ year old woman -- look, not everyone will work for $8/hour -- can't lift him).

Look, I'm not saying that everyone will face these needs and I'm also not saying that I think we should pretend there are no problems in the system, obviously there are.  But I also think it's silly to imagine that the problems are with the consumers (the people in nursing homes, or assisted living facilities, which, again, aren't the same thing, but each of which merits attention), or that it's just that somebody hasn't thought about the issues you're raising.

rationaloptimism

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It's hard when the issue is so personal, and I understand that you want the best for your dad.  So do I.  For your dad and for mine.

But let's put your Dad aside.  And think about the general instead of the specific for a minute.

If I step back and look at the whole system, at society as a whole, there is something that just doesn't add up. 

In a way what we're saying is that when someone nears the end of life and can literally no longer get in and out of bed by themselves, their life savings should be spent on pulling them out of and putting them back into bed.  Not on a legacy for their children, not on charity, but on assisting them with basic bodily functions that they are now to old or too ill to perform themselves.  In addition to spending money on what is arguably not its highest or most productive use for society, we also want to dedicate the working lives of 3 different people (1 per 8 hour shift* 3 shifts) to the act of lifting a group of people in and out of bed.

There is no way that this works for society as a whole.  As someone said, we have to start getting more comfortable with the concept of death (it is inevitable after all).  In caveman times, or native American times, once an elder was no longer able to sit up on their own, everyone acknowledged that they were at the end of life.  Nowadays, we don't want to admit that.  Multi-year stays in expensive hospital beds or the equivalent have become the norm. 

If resources were infinite, then of course we would treat everyone like this.  But because resources are limited, we have to think about opportunity costs.  What is the best thing that can be done with $72,000 a year?  Assisted living for the very frail and week probably isn't it.

I'm not proposing "letting people die."  I'm just proposing that we consider some natural limits to late-life care.  When someone really needs full-time care well beyond what could be provided family members or even non-family medical personnel in the home, they are barely functioning.  It doesn't seem appropriate to spend vast resources in accumulated capital and in man-power for every person who is barely functioning, not due to acute illness, but due to simple old age. 

And the math doesn't work for society.  Less than 10% of Americans will ever be able to privately fund $72,000 a year.  As I mentioned, that's TWICE the PRE-tax income for the average American.

So really we're saying that affluent people deserve this treatment, and less affluent people should provide it for them. 

And we're saying, hey, we MMMers are good at saving, shouldn't we save up to make sure we're in the affluent group who gets the full time medical care for an infinite number of years. 

This IS a kind of affluence that is available to people who save enough money.  The question is, how will we prioritize this compared to the freedom of not working sooner.  Or the freedom to pursue some similar luxury during youth--e.g. personal assistants and personal trainers now instead of personal nurses later.



JohnGalt

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It's hard when the issue is so personal, and I understand that you want the best for your dad.  So do I.  For your dad and for mine.

But let's put your Dad aside.  And think about the general instead of the specific for a minute.

If I step back and look at the whole system, at society as a whole, there is something that just doesn't add up. 

In a way what we're saying is that when someone nears the end of life and can literally no longer get in and out of bed by themselves, their life savings should be spent on pulling them out of and putting them back into bed.  Not on a legacy for their children, not on charity, but on assisting them with basic bodily functions that they are now to old or too ill to perform themselves.  In addition to spending money on what is arguably not its highest or most productive use for society, we also want to dedicate the working lives of 3 different people (1 per 8 hour shift* 3 shifts) to the act of lifting a group of people in and out of bed.

There is no way that this works for society as a whole.  As someone said, we have to start getting more comfortable with the concept of death (it is inevitable after all).  In caveman times, or native American times, once an elder was no longer able to sit up on their own, everyone acknowledged that they were at the end of life.  Nowadays, we don't want to admit that.  Multi-year stays in expensive hospital beds or the equivalent have become the norm. 

If resources were infinite, then of course we would treat everyone like this.  But because resources are limited, we have to think about opportunity costs.  What is the best thing that can be done with $72,000 a year?  Assisted living for the very frail and week probably isn't it.

I'm not proposing "letting people die."  I'm just proposing that we consider some natural limits to late-life care.  When someone really needs full-time care well beyond what could be provided family members or even non-family medical personnel in the home, they are barely functioning.  It doesn't seem appropriate to spend vast resources in accumulated capital and in man-power for every person who is barely functioning, not due to acute illness, but due to simple old age. 

And the math doesn't work for society.  Less than 10% of Americans will ever be able to privately fund $72,000 a year.  As I mentioned, that's TWICE the PRE-tax income for the average American.

So really we're saying that affluent people deserve this treatment, and less affluent people should provide it for them. 

And we're saying, hey, we MMMers are good at saving, shouldn't we save up to make sure we're in the affluent group who gets the full time medical care for an infinite number of years. 

This IS a kind of affluence that is available to people who save enough money.  The question is, how will we prioritize this compared to the freedom of not working sooner.  Or the freedom to pursue some similar luxury during youth--e.g. personal assistants and personal trainers now instead of personal nurses later.

I completely agree with this. 

The one thing I'll add is that there are choices that can be made throughout one's life that affect this.  Those choices have consequences that everyone will have to live with.  No one should expect society, their children, their neighbors, or anyone else to sacrifice make up for their own choices for them.
You could choose to save enough to cover this type of care.  In which case, great, go ahead and spend your money on it.
You could choose to save enough to cover some minimal care.  In which case, you'll get whatever you can afford.
You could choose to save nothing.  In which case, you should be left on your own.  Period.  Do not expect anyone else to pay for it. 

I realize that most people aren't thinking of it in these terms early on in life - but that shouldn't matter.  If they choose to drive a new car, have the latest iphone, eat out every meal, and so forth - they chose to consume their resources throughout their life rather than saving those resources to support them in old age.  If we choose to forgo the consumer items but only spend 10 years working so we don't save enough resources to support us in old age- then we have made a similar choice in regards to old age care.  If someone else wants to forgo consumption and work for 30 or 40 years in order to have a comfortable, perhaps prolonged, old age period - then that's their choice as well.


bogart

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@rationaloptimism, @JohnGalt -- basically, we agree.  I get that we're talking about allocating resources to one set of priorities/people over others, and not, in fact, to those I'd choose in an abstract, general sense.  Moreover, though I haven't gone into the details in this thread and don't plan to, my dad's not a particularly nice guy and he's certainly not someone who planned ahead, so I'm also not actually advocating being nice here "because it's my dad" (even though I am, in fact, nice because it's my dad).  We in the U.S. are not (to date) however, willing as a society to make the kind of "hard choices" you are advocating, nor can I make them "on my dad's behalf" (that is, I have no legal right to limit his access to care).

All that said -- while I agree with much of the "big picture" you present, I do think it's important in thinking about planning for our financial futures (getting back to the OP's point), (a) that a person (even a perfectly reasonable person who has planned sensibly) may experience vast costs in later life, (b) that those costs don't necessarily reflect an intense need for medical care, as opposed to just care, and (c) that it's not obvious (simply because they are, indeed, vast), that those costs are "inflated" -- that someone is overcharging for these services and/or that they could in fact be procured by a cleverer person more cheaply. 

And while it's well and good to say (as @rationaloptimism does) that, "I'm not proposing 'letting people die.'  I'm just proposing that we consider some natural limits to late-life care," in reality, proposing natural limits to late-life care is, indeed proposing to let (some) people die, perhaps far sooner than they otherwise would.  I'm good with that (though we in the U.S. as a society are not, and neither is my dad), and happy to agree that spending on one group uses resources that might be better allocated elsewhere, but not with pretending there's no relationship between providing (adequate palliative/logistical) care and prolonging life. 

DocCyane

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Personally, I donít think that future generations should expect to receive the same type as care as the current crop of senior citizens.  The cost is too much for the healthcare system to sustain.  I fully expect that by the time I get to that age the system will have reinvented itself, but Iím not sure exactly how it will do so.  I will save as much as I can, take care of my health, and hopefully live by my principles and not spend hundreds of thousands of dollars extending my life.

+1

Well said. We won't have these options when it is our turn. We will just need to go with dignity.

gooki

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The way I plan for it is to sell our home to fund any sort of infirm care.

That and voting to legalise euthanasia.