<p>You are talking apples and oranges, notrichenough. We have a FSA too, and we will use it for deductibles, eyeglasses and such so we use up what is in there. We could have put less in the FSA as well. Also, what is your current deductible and copay? If, for eg, you have a family of 3 or 4 and you all have an individual $600 deductible or family deductible of say $1500 (making these numbers up) you’ll spend a lot for you and your family in deductibles alone. Then there are the copay/coinsurance numbers. If you just have a $10-15 copay, visits are probably cheap for you. But if you have to pay a coinsurance… say 20% for in network docs and 40% for OON Drs, your costs will rise. </p>
<p>This is different for Medicare. Currently, IIRC, the deductible is $162 per person, and the have a 20% copay (they are finally at parity or close to for mental health services, for which the patient had to pay 50%-- but I digress). Since Medicare doesnt allow much for the drs charges, that 20% might not be a ton of money. Then again, if you go to a million doctors, it can add up. And hopefully by the time we retire they’ll have fixed the Medicare part D prescription plan and the gap in it.</p>
<p>**ETA You calculated about $4k/yr for premiums ( I assume thats a family plan). Thats actually a very inexpensive premium rate!! Medicare has 2 parts-- A (Hospitalization) and B (Drs visits) . Most people who have worked 40+ quarters of eligible employment pay no Part A premium. This year Part B premiums are , IIRC, $96.40- $110.50/mo per person- and IIRC it is taken from the SS checks. The premiums are much less than what we pay for our private health insurance. <a href=“medicare.gov/my”>medicare.gov/my;
<p>as someone who works in insurance, 416 a month for health care costs for a senior is very very accurate. Even the people whose social security is only 600 a month are still paying about 115 a month for medicare plus whatever their other health insurance bills are… if they have no other health insurance then believe me they are getting bills left and right for the health care services they are using because medicare only pays a portion. whether or not they pay those bills, who knows. part of the reason health care services are so high is because of the amount of people who don’t’ pay for the care they received… if they take a supplement and a part d plan as well as medicare that usually amounts to about 300-400 a month each person total, not counting any long term care insurance. You would be amazed how many people with tiny social security checks pay half of it to health care. Many of them live in housing where their bills determine their rent and whatnot. Some people actually call us saying i need a plan that costs me 200 dollars a month because with that out of pocket then I quality for medicaid and they will pay my bills for me. It’s a sad world sometimes. I actually had a woman yell at me once because the Most expensive dental insurance plan I could find for her was 59 dollars and she needed her dental plan to cost 80 dollars or she wouldn’t quality for state help. I was thinking why don’t you stop trying to buy the most expensive plans and maybe you wouldn’t need state help. She was livid with me for not having a more expensive insurance for her. That was a first, believe me.</p>
<p>I’d say health care costs easily eat up 30 percent of the average persons retirement income, notrichenough.</p>
The original line was "if you need $100,000/year to live on then you need $2,000,000 earning .05% interest per year. ", they clearly meant 5%, not 0.05%. 0.05% of 2 mil is only $1000/year.</p>
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You are still paying those, it doesn’t matter if you can reimburse from an FSA or not.</p>
<p>I think the copays are $15/25, deductible is $200/$600, 10% co-insurance, $1700/5100 max out of pocket, more for out-of-network providers. Very average for companies in the industry I am in, but it’s a decent plan overall.</p>
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That’s only what I pay, which is around 28% of the actual premium, which puts the full price at $14K+. My company pays the rest. It is a family plan though; for employee+1 it would be around $9K for full price.</p>
<p>Does that Fidelity estimate include long term care insurance or any allowance for nursing homes? Or is that not a "medical"expense?</p>
<p>Yes, FSA’s are wonderful benefits-- to be able to pay for these things with pretax dollars. Its like 30% or so more free dollars. Funny how many peple buy eyeglasses at the end of the year to spend down the FSAs!</p>
<p>And of course the corp sponsored insurance plans are subsidized by the companies. Not sure what your point is there either. Of course healthcare is expensive. No argument on that one. But the OOP costs for Medicare premiums are still going to be cheaper than the OOP premium paid to your company by you. So if you are comparing what you pay before/after the age of 65, its hard to follow your point.</p>
<p>If the Fidelity calculation fore healthcare espenses is only $413 or so per person per month, then it is clearly unlikely that they are including many of the other ancillary healthcare costs. Thank heavens my late father had a long term care policy, and the premium vanished once he was able to access the benefit. He rapidly outlived his money paying for caregivers, case managers, etc, none of which was covered by Medicare or his secondary insurance. </p>
<p>So if your point is that healthcare is expensive, well you’ve got that right. And yes, it consumed a huge part of my dad’s income/savings. But again, for those who do not have the additional funds, as fendergirl explained, people do what they can to access Medicaid dollars.</p>
<p>Bookworm–I’m assuming post-Medicare age. Earlier, we’d have to add in the price of the cheapest plan we could, which would have to be much less than 23k.</p>
<p>Okay, otherwise-- no mortgage, real estate taxes are now about 3000, food say 5000, utilities about 4000, cars/house insurance we’ll round up to 3000, gas less than 1000, home maintenance 2000, media/phones 2000, that’s all about 20K Lets throw in 2000 for clothes and stuff. So whatever we need to supplement Medicare might put us over, but otherwise, well, honestly, that would seem to do it.</p>
<p>I mean, millions of people live on take home that’s less than that, don’t they?</p>
<p>jym, you would be amazed how little people on social security make. I talk to them every day. My projected statements that I get from social security if I were to get disabled right now are more then what a lot of my retired customers get… and I"m only 28. I always feel so bad about it but if you think about it back when most of them were working they made a lot less then current wages and it’s not like social security gives the biggest “raises”.</p>
<p>I’m putting away about 15% of income + tax returns + any other windfalls (bonuses), so, about 25% of total take-home?</p>
<p>Once the wife starts working, we’re putting almost her entire salary away after her loans are paid off, and living almost entirely off of my salary. This allows for a good college fund, and an annuity that will provide for approximately 80% of anticipated working take-home income. </p>
<p>This has two prongs of logic:</p>
<p>1) My income is almost certainly going to be less, as she will be a doctor. That means that if I lose my job (again, not a doctor, losing a job is more likely than her), we still can get by on one income.</p>
<p>2) This gives us a large buffer to afford things like cars, children’s funds (schooling, etc.), paying of the mortgage quickly, etc. </p>
<p>But I wonder if maybe I’m too aggressive, and if aiming for 80% of peak working take-home income from an annuity is a bit too much. Keep in mind, I’d also like to have money to help support the kids if/when they get married, buy houses, etc. like my wife’s father has. It seems like a nice thing to do.</p>
<p>Thoughts, those with more experience and wisdom?</p>
<p>Oh, well, if it gives you any insight into how we live now even at about 15-20% savings, we’re taking a 10 day trip to Europe in May, and I manage to budget in things like karate and a really nice home stereo.</p>
<p>We just spend a lot less on things like cars (we share a single Honda Fit), food (two people who eat at home a lot, brown bag lunch), and don’t go out much to drink.</p>
<p>I average about $9000 a year for two for food and drinks, for example. We’re frugal about daily stuff, but spenders on things like travel-- also, I buy the nice booze at home and just enjoy it in front of the 55" TV without having to deal with surly bartenders.</p>
<p>Also, no annuity at the moment: mostly market-based funds, money market, a mix of bonds, and a mix of stocks. I’m somewhere between “risk averse” and “slightly adventurous,” but I mostly chase slightly above market returns over the long-run and dividends.</p>