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Transcript

Mike:

What are you doing about potential healthcare costs, whether it’s regular health insurance expenses, whether it’s Medicare long-term care, Hey, health insurance is the cost. We all know the cost is going up and up every year. What are you doing about it?

Zach:

You’re listening to your retirement today. I’m your co-host, Zach Holcomb, and alongside me, we have Michael Reese, founder and president of Centennial Advisors and retirement planning expert today’s show has been all about the questions you have to answer to make work optional. We’ve talked about generating the income you need and protecting yourself from invasive taxation when you retire. Now, third question, we’re going to talk about healthcare. This is a sensitive topic for a lot of people. Some people don’t want to discuss

Mike:

Well, you know, the other thing is it’s also a big topic. So I want, I was talking to someone the other day and a very nice couple. And he is 61 years old. The gentleman is and the wife, you know, a few years younger. And he was telling me, he’s like, man, I’d really love to retire. I’d love. He’s like, you know, we’re talking about making work optional. He’s like, I’d love to retire. Maybe do something else. Maybe, you know, maybe start a consulting firm or something. In fact, that was exactly the Saudi. He liked that idea. Like I liked the idea of doing a consulting for that way. Cause you know, right now he makes a pretty decent amount of money, but he’s saying, you know, it’s like work. It’s, it’s gotten really stressful. It’s pretty, there’s a lot of pressure, a lot of deadlines. He goes, man, if I could be a consultant because I asked him, I said, Hey, what’s your ideal scenario? He says, ideally, I could just be a consultant. I could just, you know, maybe work part-time you’ll pick and choose the projects I do. And you know, be a lot less stress. Right? I like what I do. I don’t think I’m ready to retire, but I don’t like the stress that’s involved with the day to day.

Zach:

Kind of what I’m works on his own terms,

Mike:

Working on his own terms. And that, by the way is a great example of making work options. That’s exactly what we’re talking about. And I said, well, what’s stopping you. He says, well, a couple things. Number one, you know, I’m not real sure how it would work. Like he goes, Mike, all my life. I’ve just been saving money. Like how do I structure my finances to reflect a new change in my life like this? We talked about that a segment or two ago. He goes, secondly, I mean, I know I gotta do something about taxes. We talked about that last segment, but here’s kind of the one thing that’s really blocking me. What do I do about my health insurance? I mean, I’m 61, my wife’s 57. I mean, we’re pretty healthy, but you know, gosh, you know, he goes, I got a buddy who, you know, out of the blue got sick and he spent some time in the hospital and thank goodness you had insurance.

Mike:

It would have, otherwise it would have cost a ton of money. It still costs from a bunch of money, but it could’ve been way worse. What if that happens to me? Right? What if we get sick? I mean, Hey, I’m not going to be healthy forever. Right? Right. I said, so I asked him, I said, so let me get this straight. The only what the, the one thing that’s really stopping you from doing what you’re really want to do. I mean, we think you’ve got enough money as you’re, as long as you have your money set up the right way. You’re okay there. But the one thing that’s kind of really getting in the way, the one big roadblock is your health insurance. It’s like, honestly, he goes, that’s it. I don’t know what I would do. So let’s imagine you’re like that gentlemen, he worked for a pretty big company and I said, well, here’s how this works.

Mike:

I said, so here’s, here’s what you need to plan on. If you would like to do this, this is how the health insurance will work in the early stages. Then we’ll talk about later on, right in the early stages, Cobra kicks in for 18 months. So you can keep the same health insurance you have right now, the problem is instead of the company paying for it,

Zach:

We’re paying for it now. You are.

Mike:

Yeah. You got to pay for it. He’s like, yeah. How much would that be? Well, if there’s two of you, you and your wife you’re covering, it could be 15/1600 bucks a month. Pretty expensive. Yeah. And he said, but still he’s thinking, wow. I thought it’d be way more than that. Right. But still 15/1600 bucks a month. I mean, we’re talking 20 grand a year. Right. That’s probably that, by the way he told me, he goes, that’d be my biggest bill, but I think I could swing that.

Mike:

And then what happens is that’s only going to last for a year and a half. So let’s imagine he just turned 61 and his wife just turned 57 for the math. Here you go a year and a half. Now you’re 62 and a half. She’s 58 and a half. Now Cobra’s done. But Medicare hasn’t kicked up in yet because Medicare doesn’t start till you’re 65. So what do you do then? Then you go to healthcare.gov and you got, and you just buy insurance and it’s guaranteed. It’s your ability. And here’s what happens. You’re probably going to pay about the same amount of money. So it’s not going to be any cheaper. Right. So it’s just a different company, but it’s going to be probably pretty similar to what you have now. It’s like, oh, okay, well that doesn’t sound like the worst thing in the world.

Mike:

And I said, then when you hit age 65, because remember he was 61. So it’s going to happen four years from now. When you hit 65, you’re getting on Medicare and here’s the deal. You go on Medicare, you get a, like a Medigap plan. That’s like Cadillac plan. That’s going to cost you 250, 300 bucks a month. At least it would today. It might be slightly more, you know, four years from now. But call it two hundred fifty, three hundred bucks today. Let’s call it 300 to be on the safe side. But your wife, she’s still younger. So she’s still going to be on healthcare.gov. So instead of paying 1500, 1600 a month, maybe you’re paying like a thousand a month now. So you get a little bit of a break. Sure. And when she hits 65, you’re both on Medicare. Now you’re down to like 600 bucks a month between you total.

Mike:

And now you’re in a lot, a lot better place. So once he understood that though, he’s like, wow, maybe work could be optional for me. Then maybe I could go off and do my own thing, which is really cool. But then I said, whoa, that’s so fast. We’re not done because there’s one more thing you need to think about. There are healthcare costs in retirement that even Medicare doesn’t cover. He’s like, well, what, what do you mean? Like, what are you talking about? I said, well, I’m talking about, and this is the dreaded phrase that people hate to hear talking about. Long-Term care. You see, it used to be when my grandfather, right? When my grandpa parents retired, they retired at like 62, 63, 64. You know, my grandfather retired at 62 or I’m sorry. He retired at 64. He lived at 67, died from a heart attack.

Mike:

Did he need long-term care? Not at all. But my grandmother who was still alive, she kept going. And she lived long enough where she had some health problems, but medical, the medical world had advanced. And instead of her dying, they kept her alive and they kept on keeping her alive. And bef- you know, eventually my grandmother ended up with Alzheimer’s never would have had Alzheimer’s in the past because she would have died. But no, the medical world kept her alive because of medical advances. She had Alzheimer’s and she lost hundreds of thousands of dollars of her life, of her retirement savings. In fact, the rest of her money, she lost to the nursing home. So I said to this gentlemen, I’m like, so what about you and your wife? Do you know anyone that’s ever lost money to, you know, because they had to pay for someone to come in the house to take care of them, or because they’d go to some kind of facility and it’s like, oh my God, my parents, right?

Mike:

You go, my parents are starting to, we’re starting to look at that for my dad right now. And, and both of his parents were still alive. Both of her parents were still alive. He’s like, yeah, my parents, my dad is starting to show Alzheimer’s and he goes, it’s just like that. He had a heart attack, but he stayed, he lived through it. He had a stroke. He lived through that. But now he’s starting to show signs of Alzheimer’s. We might have to put him somewhere and guess what? That’s not free. Well, I said, well, what about you? What about you and your wife? How are you going to deal with that? And one of the things that’s kind of interesting today is that right now a lot of people, you know, life insurance is becoming a really hot topic. And, and the reason for that is for a lot of people, they’re worried about taxes and retirement.

Mike:

If you design and utilize life insurance contracts the right way, it can help with taxes. But here’s the other thing. Life insurance contracts today, the death benefit can also be used to pay for long-term care. And so, you know, one things I talked about with this gentleman and say, look, you got tax problems, you have healthcare problems. Maybe we should be investigating whether or not we should be including certain types of life insurance contracts in the mix. His case had actually made sense. It doesn’t make sense for everybody. It does not make sense for everybody, but in this case it did. But yeah, the point though, is what are you doing about this? What are you doing about potential health care costs? Whether it’s regular health insurance expenses, whether it’s Medicare long-term care, Hey, health insurance is the cost. We all know the cost has gone up and up every year.

Mike:

What are you doing about it? And by the way, that’s our third decision. What did we say? You’ve got three questions to answer. You want work to be optional, got to get your portfolio structured. So that generates income to replace your paycheck. Number two, gotta deal with taxes. Number three. What about health care? That those are the three decisions. The three the three strategies you’ve got to employ to make work optional. This can be the easiest path to complete financial security. All right. We got a wrap. That’s our show. This week. We will catch you next week. Take care everybody.

Zach:

Hi, and thanks for checking out retirement today. If you like the content we share on our channel, make sure to like comment and subscribe. So you can say notified about all of our latest content and videos. Be sure to share all of our information with your friends and family as well. Thanks for joining us. We’ll see you next time.