Lessons From Having the Flu and Pneumonia

January 17, 2014

One of my philosophies of life is that if you’re going to take the time to do something, you should take pride enough in yourself to go all out and give maximum effort. I took that to a new level recently by not only getting “The Flu” (It’s an actual thing, not just something that people talk about and it’s terrible! Get a flu shot!!!) and to go along with it, I went the extra mile and got pneumonia as well. I don’t get sick very often, but when I do it’s usually a complete wipe out for a few days. Fortunately for me, I was able to go to my doctor, be seen in a timely fashion, get the tests I needed (flu test and chest x-ray) and then hit the pharmacy for the meds I needed. The good news is that like all of my prior minor illnesses, I survived this one and am here to write about it…

What my little bout with an illness showed me is just how crazy expensive something as simple as my little medical issue can be. And then I thought about people who are closing in on retirement and wondering about how to fund their healthcare costs in retirement. In fact, I’ve talked with hundreds (if not thousands) of people contemplating retirement and one of the single biggest issues that comes up in those discussions is health costs.

Fidelity produces a report annually that discusses the cost of healthcare during retirement and over the last several years that number has hovered around the $200,000 – $250,000 range for an average 65-yr old couple. That’s more than a lot of people have saved for retirement! So, what’s a person to do? There are some things that you can do while working to minimize or prepare for these costs. And these are things that I am doing currently, so I’m not asking any more of anyone that I’d willingly do myself!

Eat nutritiously! Yeah, it’s sounds simple and it’s probably not the first time you’ve heard it, but high fructose corn syrup is a mortal enemy in my household now. Fresh fruits and veggies, lean meats, blah blah blah…you know this stuff so I won’t drag it out. Diet has been linked to health concerns for an enormously long time and it’s not going to change any time soon.
If eating well was first, you know the next one: exercise. No, we don’t all need to be Arnold Schwarzenegger (the bodybuilder, not The Governator) but even a mild walk for 30 minutes a day to get the blood flowing throughout our bodies and not directly to our sofa-touching parts is a constant recommendation by physicians across the world.
Maximize your health savings account contributions! (finally, a financial suggestion in a financial blog) In 2014, you can contribute up to $3,300 for an individual or $6,550 for a family.
Don’t use your HSA! Huh? But you just said to max it out. Here’s the deal. Max out the contributions, but let them sit there and grow. Pay for your out-of-pocket expenses from your regular cash flow so that your HSA balance can get as close to funding retirement health costs as possible. The upside is that if you don’t need this money for health costs (and you can use it for the cost of premiums when you are no longer working and receiving benefits paid for through your paycheck) during retirement, it can be a supplemental retirement pool of assets. There is not a single negative that I can think of from funding your HSA and letting it grow.
Shop aggressively for insurance when you need to purchase it. You can look at every potential health insurance carrier licensed to sell insurance in your state. (You can go to your state’s insurance administration website to see which companies are licensed). Look on the company websites for pricing. Look on your state exchange. Look at organizations you may belong to (AARP comes to mind). Leave no stone unturned when looking for ways to spend your dollars most efficiently on health insurance.
Run retirement projections. Yeah, it’s a bit odd when talking about medical costs, but most people don’t have the foggiest notion how much money they will need to live a comfortable lifestyle during retirement. If they don’t know that, if you don’t know that, how will you know where to even begin with funding your health costs? Knowing where you stand regarding your retirement goals may be the most important step in the process. You can then begin to prioritize your next steps from a cash flow perspective, set your future priorities and get busy preparing for the rest of your life.

With a few relatively easy to manage steps, you can begin to demystify the whole concept of how to take care of the cost of healthcare during your remaining working years as well as during retirement. It’s a serious concern for nearly everyone I meet with as they prepare for retirement. If you’d like to get a serious head start on your preparations, do this and feel free to leave comments/questions below.