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Comment by alistairSH | Hacker News Reader

Interesting. I'm solidly upper-middle-class (typical income for this forum, I imagine). I don't think doubling my net worth would make me much happier or financially more secure. It would allow a new Tesla instead of a used BMW. And flying business class for vacation. With the state of health care/insurance in the US, despite being a ridiculous amount of money by most measures, it wouldn't allow me to retire in the 50s or remove the concern that I'm one bad car accident or cancer scare away from financial ruin.

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Yep, the US healthcare system basically means you have to be a multimillionaire when you've retired if you want to have any semblance of a comfortable retirement, because any serious injury or health issue (which will happen at some point) will do a damn good job of sucking up most or all of that money away super fast.

If you're younger at least you might get lucky with GoFundMe "insurance", but that requires your story being sad or unusual enough to go viral, or you have a large family and friends network (starting a donation campaign on GoFundMe.com, what just about every American has to rely on for serious health expenses nowadays). If you're old you're probably not going to be pulling at enough heart strings to rely on this, though.

I thought everybody over 65 in the US got free national healthcare?

They get free national health insurance, but it doesn't cover everything and dealing with the bureaucracy is a non trivial amount of effort. And there are still out of pocket deductibles to pay even with this national coverage. As a result people often purchase supplementary insurance.

It's the US, so of course "free healthcare" still leaves you with lots of large bills if you actually use any healthcare. Usually one pays for "gap coverage" insurance, running low-hundreds of dollars per person (consider: married couples) to cover things that aren't covered, or are poorly-covered, by Medicare[0] and those still don't mean you aren't going to have a substantial hospital bill if anything goes wrong (as they usually don't cover 100% of a bill, just like normal US health insurance)

[0] Medicare is our insurance program for old people, and I think also kicks in for those who are disabled at younger ages. Medicaid is the name for our HC program for the very poor. People get these mixed up because the names are so similar. Then of course there's our coverage for the active military and their families (Tricare) and VA healthcare coverage for retired military. And programs for other government employees, and their families. By the time you add it all up, a huge percentage of the US population is already covered by government healthcare schemes, actually, which is reflected in our spending enough on publicly-funded healthcare that we should be able to cover everyone with just that money, if our costs were similar to the rest of the OECD. Instead we still have the costs of private insurance and bills to individuals even when covered by healthcare (these can run into the five figures per year, easily, on top of insurance costs) and, for some of the above, huge expenses in addition to the costs of the government portion of the HC program.

[EDIT] Medicare gap coverage tends to run low-hundreds of dollars per person per month, in case that wasn't clear.

Medicare is reasonably cheap (assuming you paid Medicare taxes for at least 7.5 years; if you did not, it's at least $471/month). To be clear, "relatively cheap" is "at least $148.50/month; more if you have more income during retirement".

But past the premiums, there are deductibles, coinsurance (e.g. for hospital stays longer than 60 days), you still have to pay for medicines (how much varies), etc. See https://www.medicare.gov/your-medicare-costs/medicare-costs-... and the links from it for details.

> Yep, the US healthcare system basically means you have to be a multimillionaire when you've retired

That's just not true. Everyone qualifies for Medicare when they are 65 years old. An extra $150/month gets you supplemental insurance, with a lower deductable than many work plans.

Also, and this is significant, medical bills can't collect against retirement accounts. The law is that they can't touch it. Same with your house and car. You can have $10k, $100k, or a million dollars in a 401k, an ira, or a roth, and withdraw it as you need it, to supplement your social security income.

So how come I keep hearing that a significant portion of homeless in the US have lost their houses in a medical-event-realted bankruptcy?

Retirees qualify for nationalized health insurance. In theory, those 65+ would be mostly immune for health-related bankruptcy (although co-pays/deductibles can still be problematic).

Anybody younger has to pay for health care out of pocket or buy insurance. The cost of paying OOP is exorbitant. Even buying insurance on the open market is outrageously expensive. In either case, major medical issues can easily escalate to be financially disastrous.

Edit - in my original post, I stated doubling my net worth (or income or whatever) wouldn't allow me to retire in my 50s due to potential medical costs. This is what I mean - even with a few million in the bank, retirement isn't feasible due to the cost of buying healthcare in the US.

I had this conversation with an uncle who lives in Scotland. He didn't understand why my dad was still working (at age 60). Medical insurance was the only reason. As soon as he got Medicare, he retired.

For the benefit of others who may be reading I'll mention a couple of other programs...

There's Medicaid, the federally funded healthcare program for the poor. It is free. As a single person there are really low limits on how much assets and income you can have and qualify. Kids are more easily qualified, even if there parents may not be. Doctor choice is limited, there are lines, etc.

There's also the VA, available for veterans. I'm not sure of the rules around this. But those qualified get free care.

Throughout the country hospitals are supposed to patch up anyone who shows up with an emergency. The patient will get a bill after, but they won't be left to bleed to death. This doesn't help with slowly developing problems, though.

Beyond these free programs, (and Medicare for retired folks, talked about earlier), there's also Obamacare, which subsidizes medical coverage for those making too much to qualify for Medicaid. Someone working full time for minimum wage and making $14k per year (which is enough to rent a room and have a junk car), might end up with a subsidized plan having a $6k+ deductable (which they don't have!), someone making double that (enough for an inexpensive apartment and a used car) would pay $175 a month for the same plan. Obamacare details vary by state.

People with jobs making more than the above often have health care offered through work, and no longer qualify for Obamacare plans. At the low end these plans may not be as good as the Obamacare plans. Typically these plans might cost the employee $100-$200/month and up if there are multiple plans to choose from (the employer may be contributing 2-5x that, depending on the job), and have a deductable of several thousand dollars, with yearly exams and routine screening included for free. The problem becomes that you have to pay for everything else up to your deductable, then costs are shared up to a max limit perhaps $15k, then the plan covers all costs for all covered care. The deductable and maximum double for family plans.

One big problem with all the plans with deductables is that it is near impossible to find out what anything non-trivial will cost, which is discouraging when you have to pay some of these costs.

Government employees typically have the best plans, similar to what the average white collar worker had 20-30 years ago. Small copayments instead of large deductables. These plans were phased out by most private employers because they were too expensive, for both employers and most employees.

I would guess the typical example of this might be a working age person who lived paycheck to paycheck then had a non-trivial medical issue to deal with. They may have already had other house/car/student/credit-card debt. The medical problem may have interfered with their ability to work. They may qualify for other free-care programs after they burn through all their savings.

(That's where putting those savings in retirement accounts would have helped, but with few exceptions you can't access that money before the age of about 60, and also remember that it's a borrow and spend culture here, not saving for a rainy day.)

The best one could say is that bankruptcy is a way to get a clean slate, wiping out prior debts, and to be sure that the homeless statistic you are looking at doesn't count those who moved back in with family as homeless (some do).

The worst one can say is that the system is optimized to extract as much money as possible form as many people as possible...

After doing the math, it's looking like my rough estimate was a little high, but I suspect the numbers I'm about to share is higher than you're thinking.

Sure, they qualify for Medicare, but that doesn't mean they won't be still be spending serious money on healthcare. According to CNBC, if you were retiring in 2019, as a couple in good health you'll need on average of $390,000[1]. That assumes you're on Medicare as well. I'm guessing most people here are about 35 years old or younger, so not eligible for Medicare for at least another 30 years.

If I assume 2.5% inflation over the next 30 years (the default given in the following link[2]), that $390k in 2019 becomes $860k in 2051.

Granted that seems to be the average, and there will be people with less expenses. But that's just healthcare. While you'll probably own your home outright by then, there's the eventual assisted living that might be in your future as well, which already can cost up to $1500-4000 a month today (with monthly expenses another $2k+)[3], let alone 40-50 years from now. Although I suspect some people help pay for that by selling their homes at that point.

So okay, maybe you don't need to be a multi-millionaire when you retire to be comfortable, but you probably should try to be a millionaire, at least you and your spouse together (assuming you're going to have one).

One thing I didn't take into account was Social Security, which assuming it's still around in 2050 that will offset some of this. I do have a bad habit of assuming Social Security is going to be either severely nerfed or fall apart by the time I retire, so I tend not to account for it in my retirement planning. Maybe you could knock off $300k thanks to Social Security checks, I don't know and don't have time to dig further.

[1] https://www.cnbc.com/2019/07/18/retiring-this-year-how-much-...

[2] https://smartasset.com/investing/inflation-calculator

[3] https://www.assistedliving.org/the-average-cost-of-senior-li...

I think that I follow your logic.

But retirement funding is so dependent on an individual's expenses, ability to generate income, expectations, risk tolerance, and available resources such as assets and family. These are all different for different people. Life expectancy and related health expenses are a huge unknown. Rich or poor we are all going to die, but we don't know when or how.

I think it's reasonable to retire as a healthy 50 year old with a million dollars. I know that may be unconventional around here. The existing (subsidized) obamacare and (supplemented) medicare options are a pretty good deal, in combination with savings to cover deductables, out of pocket maximums, and dental. Medicaid would be the backup for the worst-case scenarios, typically long term nursing home care. But that'll bankrupt most people, in most countries [0]. Is it reasonable to expect otherwise?

I was curious about the $390k figure you quoted, there wasn't any detail provided. I wonder if these are expenses over and above what medicare covers, like elective surgeries, or if this figure includes money for private nursing home care, etc. It was for two people.

Back to your original post, it is easy to keep retirement savings in a qualified 401k/ira/roth account that, along with a primary residence up to a generous maximum, is protected from medical debt with the exception of long term care. A retired millionaire should have around half of their money protected in such accounts. Do other countries give someone in similar financial circumstances a better deal?

[0] https://www.thinkadvisor.com/2014/11/24/12-countries-who-in-...

What about private insurance?

This is patently false and what mikem170 says is true. My mother has little-to-no savings and had a serious issue happen where she was in the ICU for a couple weeks and then in a rehabilitation facility for a month and a half, and paid nothing.

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