Hello, and welcome back to Module One. In the last lesson, we talked about establishing a target date for your retirement. And today's lesson, we talked about an existential risk, we must all be aware of as we age, and that's the cost of staying healthy and functional. How will healthcare costs influence your retirement? Here are some questions everyone needs to think about at some point. Are you going to retire soon?

Or is it years away? How long will you live? We've talked about that one already. Here are some questions everyone needs to think about at some point. Are you going to retire soon? Or is it years away?

How long will you live? We've talked about that one already. And remember, healthcare costs in this country are among the highest in the world. And our life expectancy is not that great compared with other industrialized nations. If you're in your 30s, this may not be a big deal. But if you're closer to age 60, get ready for it to be a really big deal, regardless of your age.

Now know that your future health care costs can easily bankrupt you. There is pressure on Congress to shrink Medicare and Medicaid, which could be critical. But there's another issue you need to know about. Medicare and Medicaid issues get talked about in Module Three. But right now we need to include health care costs as you build your roadmap to the future. Regardless of your health today, one of the prices we pay for longevity is declining health.

Sometimes it's a sudden event or a slow one. I don't like watching a car turn to rust or paint dry. from day to day, it's mostly the same but over time, you can tell it's going south. As we age, healthcare issues become increasingly real. Planning for healthcare costs becomes a very real unnecessary requirement. If you expect to live a long and productive life and paying for it can have huge impact on your road to a successful retirement.

Here's why. Most of us have some form of health insurance prior to retirement. We along with an insurance company share the financial burden. It's with an insurance policy that you Transfer the risk of severe economic loss to a third party and insurance company by paying premium. Once you reach age 65, you have the option of signing up for Medicare, which is the federal health care insurance option designed to keep people alive without going broke. If you're still working and have health coverage through an employer sponsored plan, you can perhaps delay signing up for Medicare, but that comes with some new risks.

As I said, we'll spend more time on this in Module Three, but a conversation about healthcare costs is appropriate for a general overview of retirement. There's also a section in the resource vault on the homepage where you can find more relevant information. Here's an image title table B from the health view services report first referenced in slide number three above. It shows cost projections for two people going forward in retirement. Chances are that even with complete coverage for Medicare and what is known as a Medigap or a supplemental insurance policy, your out of pocket costs have the potential to be dramatic. By the way, medical Care pays roughly 80% of covered expenses.

Your Medigap policy pays the remaining 20%. But there's a limit on any given medical cost that is not covered. All of these are averages that may or may not reflect where you live. As we age, we develop more medical issues that require attention. you couple that with a health care delivery system and insurance system in this country that has significant flaws, and the cost for this attention can be debilitating. Without going into the why you'll soon discover you're paying more per capita for health care than any other industrialized country in the planet.

Not only that, but average health care outcomes fall short of those other countries. What I'm saying is that we pay more for a given procedure in this country and get less favorable outcomes than citizens of other countries. There's not much any of us can do about this except be aware of it and somehow included on our roadmap when planning for a successful retirement. A quick personal story. When I was about 45, I was between jobs and for some reason I went through 30 days before my new coverage became effective. During those 30 days, I had an emergency room visit, stayed overnight in the hospital and was sent home with a bill for about $20,000.

Paying that Bill 30 years ago resulted in a significant drain on my resources. If you'd happened in 2017, it might have easily been $150,000. Do you have enough money set aside right now if that were to happen to you, health issues don't necessarily kill you. You've come out the other end ready to get on with your life. But it's like student loan debt. It's gonna hang over your head unless you find a way to pay for it.

Yes, what happens to that money you're trying to accumulate for a successful retirement, you should go to the resource vault and download a copy of the health view services report and use it as a resource. As new ones become available in later years. I'll upload them to the vault. If your retirement is going to be successful, you have to come to terms with what healthcare is going to cost you along the way for about 30 years starting in 1976. Sold health insurance policies to individuals, families and small business owners. It's where I got my start in the financial services industry.

I watched his annual premiums increased every year by about eight to 10%. I was okay with that, as my Commission's were usually a percentage of the premiums paid, so I effectively got a raise every year. Remember, healthcare is pretty complicated. There are reasons why annual cost increases exceed what you would expect. But again, this is not the forum for debate. Just know the current projected rate of inflation for healthcare costs is around 5.1% per year, which is way above the basic rate of inflation.

Finally, in the context of thinking about health insurance, and healthcare costs, as you build your roadmap for the future, you need to take into account what is known as a long term care event. Long term care or LTC is the term we use to categorize your circumstances when the need for help goes beyond what your family can provide on a daily basis. There are defined activities of daily living. And when you can't do some of the things that Healthy People do without thinking, it triggers what is known as an LTC event. Something has happened that requires you to have help performing your normal activities of daily living. According to Fidelity Investments a couple in their mid 60s we'll need $275,000 to cover healthcare costs in retirement, according to their 2017 estimate.

This is before taking into account expenses associated with long term care. The chart on this slide is from a report by Genworth Genworth is an insurance company that stands at the top of every company that sells Long Term Care Insurance. They sell more than anyone. Incidentally they are now owned by a Chinese Consortium. The report says that in Florida, the menial median annual cost of a semi private room in a nursing home is already 94,008 96 that's close to 100,000 bucks. It's pretty obvious that if you live to be 100 The odds of getting or needing some kind of assisted living or long term care, it's going to cost someone a lot of money.

If your brain has gone numb by now, just remember these three options that we talked about in Lesson One. One is that retirement will happen on your terms. Two is that retirement will happen because you have two or three, you're not going to retire because you died before you got there. In normal society, it's frowned upon to simply take someone out into the woods and leave them there, hoping they'll pass away, you get sent to jail for that. So care for the elderly is a fundamental component of society and goes back millennia, but today, the cost of that care has to come from someone somewhere somehow. We're now at the end of module one.

We've explored retirement conceptually, you're working on a better understanding of strategic and tactical thinking, and you're starting to create your roadmap to retirement. I really hope you took some notes and are starting to provide your answers to the questions I've posed so far. are now Step is to move into module two. Here's a list of what we'll be discussing. The idea is to develop a better understanding of the ins and outs of growing your financial reserves and the buckets into which you put money today so you could withdraw them at a later date. This is the money you'll use to pay your core expenses and have some leftover to enjoy life.

See you on the other side.