Navigating Retirement Health Costs: Planning Ahead
Freddie: Healthcare costs could easily exceed $300,000 thousand dollars. Catching many retirees off guard is that you? While Medicare helps, it doesn't cover everything, especially long-term care and out of pocket expenses. In this episode of Leibel On Fire, we'll explore what's driving these costs and how retirees can plan ahead to keep them effectively.
Hello again and welcome to Leibel On Fire. I'm Freddie Bell, and with me is the man. I love to call him that. He is the author of two different books, one called Authenticity and also Living with Financial Anxiety. He's Leibel Sternbach Leibel, hello and welcome back.
Leibel: Hey, how are you doing?
Freddie: I'm doing well, and uh, the topic is intriguing, retirees facing a six figure healthcare bill when leaving the workforce, this is really interesting to me.
What drives, first of all, the high cost of healthcare in retirement, and how accurate is the six figure estimate? I know that people tend to get more ill as we get a little older, but, what are the real drivers behind this Leibel?
Leibel: The real drivers. There's several drivers behind it, and there's, and it's important to understand this, so one, when we see headlines like this, these six, seven figure numbers
generally speaking, they're talking about the total cost regardless of who's paying it. But what the high level number is, right? So you as a retiree may not pay that six figures, but it's gonna cost the system that the that six figure number what it is important to know, right? Like even with those higher numbers, right?
Is that depending on. What level of insurance you have on you. Everyone's got Medicare to some degree or another, but the fact is, is that Medicare doesn't cover everything. And depending on how much insurance you have got to supplement your Medicare is really, really gonna determine how much of that money you pay out of pocket.
The other kind of component, and we could talk about all of these individually. The other big component of this, and this is the thing that really drives this number and, and honestly saying, you know, all these numbers, I think really underplay what the true cost is. Because as we, we mentioned in a few times in this show figures don't lie, but liars like to figure. And when it comes to these numbers, they are so subject to manipulation. What I think the big driver of this number is, is end of life expenses. And end of life really, I think is, we, we can start with the day that you are no longer able to fully care for yourself on your own
to the day to the day that you pass. Right. And the expenses that are related to that are astronomical. And they're only increasing. Right. People are living for longer. Medicine is becoming more and more available, and that means that unfortunately, or fortunately, right? We've got more expenses and it's an, it is an increasing number.
So just say 100,000,, 200,000, a half a million, right? I've seen numbers all over the place, but I don't think any of them are real, right? Because the question is, what is it gonna be for you in your area? And it's gonna be different for everyone depending on the level of care you need in those last few years of your life.
Right. And those last few years can be 10 years, can be 15 years, can be two years. Right. Um, depending on what you need at that point, it can be really expensive.
Freddie: Interesting. So we're talking with Leibel Sternbach, and I'm just curious, and this is a simple question, but it has a lot of parts. What does Medicare cover and where are retirees most vulnerable when it comes to those out-of-pocket expenses?
And the first thing that pops in my mind is long-term care.
Leibel: Yeah. long-term care is the big one. But let's talk about Medicare. So Medicare and I'm by no means an expert in Medicare. There are people who specialize in this, but let's talk Medicare from the basics, right? And this is important to keep in mind.
Medicare is not your typical health insurance that you have when you're working, right? It is. It is a government program and like government programs, it leaks like a sieve, right? It is so full of holes and so what it will cover you for and kind of the comparable that you had while you were working is, you know, it, it's a kind of like a hospital indemnity plan, right?
That's sort of what Medicare acts like. It'll cover your basics. It'll cover, you know, a hospital state. It'll cover short-term nursing state for a while, but it doesn't cover like most of the things that you really need, right? So, you know, if you got real hospital bills. It doesn't cover that, right? It doesn't cover the specialist unless you start getting Medicare supplement or part B and D and C and all the different age, right?
A is the thing you get for free and you pay maybe 185 bucks a month for most people, but then you start getting more, Right? And it's like, well, what about drugs? What about specialists? What about hearing aids? What about, you know, hospital and you've got all these other parts? And then the question is, is, okay, what do they cover?
What do they not cover? How long do they cover it? As we get older, probably a heart attack is somewhere, you know, or a heart prevention, right? Getting bypass and all that kind of stuff, right? Lots of people are gonna have that costs 75,000, a hundred thousand dollars right there.
And if it's not covered, boom, you got your expenses there. Trip and fall, and all of a sudden, well, Medicare will pay for the first 90 days. What happens afterwards? What happens with rehab? So many things are missing from Medicare out of the box, and that's where those, some of those expenses come into play.
Insurance all the other parts and the private insurance that you can get with that can cover a lot of those gaps. But nobody is going to pay for the or I don't think any of them pay for the long-term care expenses. Right. And when we say long-term care. We're talking about the things that happen that are like, greater than 90 days, right?
The things that, you know, having someone come into your house and help you with daily chores, right? Even before the nursing home, the assisted living, or if you're living at home, which I highly recommend, right? The changes that need to be made to your house. All the different things. And, and Freddie, you're, you're a little bit of an expert on this, right?
Freddie: A little bit,
Leibel: yeah. You, you wanna chime in?
Freddie: Well, you know, long-term care and, uh, living in place, staying in the place where you've, uh, got the family homestead and all the rest of it. But it, it is really, it's a moving target, it seems, Leibel because if you're planning. How can you plan for a heart attack?
How can you plan for bypass surgery? How can you plan for long-term care when you didn't know that, uh, you were in such poor health until you went to the doctor because you fell and they found something else? Yeah. How, how can you plan for that?
Leibel: And even if everything went perfectly, even if you were in perfect health until those last few months, right.
And whatever it is that, does us in, right? Like, and everyone, very few people are lucky enough to just die in their sleep perfectly healthy, right? Most people have something that fails in our bodies because our bodies weren't designed to last for forever. And so as those things start failing, they get expensive.
Because we have modern medicine, right? Because we don't just die from, from kidney failure. We don't just die from, you know, suddenly, you know, our appendix bursts and we die from, you know, sepsis. We have medicine to deal with these things and extend our life and it's expensive.
So how do we plan for it? The truth is that what we can plan for are the things that we know, right? And the things that we know are, do we have enough money to cover those end of life expenses, right? Do we have. Hundreds of thousands of dollars to cover for it, right?
Or millions of dollars to cover it for it. Or are we going to need the government to help supplement us and cover those end of life expenses? That is the first question that we gotta answer, right? Because some people have the millions, right? And some people don't, right? Most people do not have the millions of dollars to self-insure, and if you don't have the millions of dollars to self-insure, then the next question becomes
Are we gonna get private insurance to cover us or do we have to rely on the federal government and the state government to supplement our savings, to help pay for those end of life expenses? And I don't think there's anything wrong with that being your plan, but what I will encourage you is you do not want to rely on the government solely because if your plan is to rely on the government, they will not be there for you.
Right. It is the one thing we can count on. Mm-hmm. They will not be there for you when you need it. And even if they are there for you when you need it, it will not be in the way that you want them to be there. So the question becomes, how do you create the best possible outcome? And oftentimes what that involves is creating a plan for
protecting your assets from the government coming and taking it. Because the government, when you go on Medicaid and the government will then pay for all your medical expenses. When you flip that switch, the government will take everything you own whether it's while you're alive or after you're dead.
They will come and take everything. So the question is how do we keep as much of our stuff as possible so that we can supplement what the government pays, if the government will pay? You know, let's, let's call it $150 a day for a nursing home stay. How do we pay for that extra $50 a day so that we can get a private room, right?
How do we pay for that extra care so that we can, you know, we can bring a therapist in for that extra few hours a day that the government won't pay for, right? So that we can extend our life or extend the quality of care of our lives. And the answer to that question is different for everyone.
There are some. Tools that are common. Things like Medicaid, asset protection trusts, figuring out how you're gonna close that Medicaid lookback period, right? 'cause there's this five year period where they can come and undo transactions or require you to use your assets. So how do we close that gap, whether we're doing itself insurance or through private pay insurance.
There's lots of tools in the tool chest to do it. But you need to have that financial plan because if you don't have that financial plan, guarantee you that 100,000, 200,000, whatever that number is that everyone keeps throwing out every few years, it's gonna be a hell of a lot more for you.
Freddie: How can we find more help at yields4u.com?
Leibel: So at yields4u.com, we've got under the resource section, we've got quite a number of things when it comes to this for long-term care planning. But again, I'm gonna point you to go through our retirement tax wot analysis. This is what we'll do for you.
We'll go through and we'll create a plan for you and we'll identify for you what we think is probably the most, uh, the, the most beneficial way for yourself to protect your assets and plan for, whether it's get a private pay insurance. To cover for long-term care expenses, whether it's the just self-insured because you've got millions of dollars and that's the way to do it.
And then you gotta really worry about the surviving spouse and if it's the surviving spouse that we're worried about lots of different tools for that. Or if it's that we do need a Medicaid asset protection plan and do we need it today or do we just need it so that we have the plan in place to kick it on when like, okay, finally we reached the point where we're struggling with the daily living activities
and we're like, okay, maybe a nursing home is in, in our future. Let's start planning for it. And we have a plan that we just, you know, switch on and make happen.
Freddie: Makes a lot of sense. We gotta leave it right there. But if you need more information, go to yields4u.com. And we've learned today, if you didn't know it already, that healthcare costs in retirement can be huge.
But as Leibel just mentioned, with proactive planning, they don't have to derail your finances. Understanding Medicare's limits planning for long-term care as we've heard, and using smart saving strategies can help make a big difference in your life and your quality of life. The earlier you prepare, the more confident you can feel about your financial future.
I'm Freddie Bell, and this is Leibel on Fire.
