A few months ago, I started a series of what I call “The Four Horsemen of Financial Planning” where I proposed that there were four key risks that you need to be aware of and plan for. You can read my first article about it here.
Last time we talked about inflation and how it is a silent enemy chipping away at your buying power in financial independence. It’s silent in that you don’t really notice it – but over decades it can have a profound effect on your ability to live comfortably in later years. (While we are here you will notice I use the term “financial independence” rather than “retirement”. I do so because many of my clients love what they do and the idea of retiring and moving to Boca Raton does not spark joy. Rather, financial independence is what we strive for. It’s the point at which the assets you have spin off enough income to sustain you and your loved ones for the rest of your life.)
On to our topic for today – healthcare. And we can start with the obvious: healthcare is expensive. If you are self- employed or pay the full price tag for your healthcare, you know. If you work for someone else, they may generously pay for some or all your healthcare premiums, which is great. But this is not the risk I am talking about. During your working years you are probably well covered for most situations. I am talking about what happens after you leave your job, or your company, and you get a bit older and need a bit more care. And as you get older maybe your mobility decreases a bit or, God forbid, you have a health crisis of some kind and find that the care you need isn’t covered.
Think it can’t happen to you? Allow me to share a story from a close friend and client. Someone I have known for decades and who has allowed me to help them prepare for financial independence. We are going to call her Susan. It’s not her name. I want to be clear about that. Susan, as I said, has been my client for quite some time. She is in her 70s and has had some health challenges but for the most part is healthy for her age. About 6 weeks ago Susan contracted COVID-19. She felt sick, went to bed, but her condition got more serious, and she went to the hospital. A few days stay and she returned home only to go back in 2 days later by ambulance. The hospital finally released her on a Friday night to a convalescent care facility and she was largely ignored until Monday. She told the orderly that she was diabetic when she arrived and yet was served a cinnamon roll and a glass of orange juice for breakfast Saturday morning after missing dinner at the hospital Friday night. It was not a good situation. We talked over the weekend, but she could barely breathe, and I could tell she was in tears. Sunday morning, she texted (or called, I can’t recall), and basically pleaded with me to get her out of there. Fortunately, I know an RN who works in hospice and loves a challenge. Unfortunately, she lives in a different state. We talked about Susan’s situation through much of Saturday night and Sunday morning and she agreed to take a red eye Sunday night into Monday morning to assist in Susan’s care. I picked the RN up at the airport at 5am Monday and we headed for Susan’s care facility. And we were able to get Susan checked out and back home to her bed within a few hours.
The great news is that Susan is making a remarkable recovery, though it will be a long road back. And, By the grace of God, she had the will and the resources to get herself out of a convalescent home and to her own home to recover. The key point here is that she paid for most of the care herself. She was fortunate enough to have planned ahead, and had the will, the strength, and the tenacity to stick it out through what was a very difficult time. And, she is not the only client I have that has faced challenges this year and needed to go outside the limits of their health insurance coverage to pay for care.
Now, let me be clear: this is not an indictment of our healthcare system. It is me pleading with you that you must be prepared for the unexpected. That you must have the resources to pay for care that may not be covered by insurance. And, if you are like many of my clients, you will want to be cared for in your home. Making decisions for your loved ones as they get older is difficult. It is a lot more difficult when their choices are narrowed by their finances. It’s not enough to save money for your current expenses multiplied by the number of years you expect to be retired. You must be prepared for the unexpected.
Have you thought about how unexpected healthcare costs might impact your financial independence? If the answer is no, or you’ve never even considered it, let’s talk about it. I’m always here for a call or a zoom.
See you next month…!