Sanity Check: Do my assumptions about retirement planning make sense
Marco Polo
along the way.
I am very much a do-it-yourself financial planner, and think i have done
pretty well, but always good to get some other perspectives.
To that end, I would like to pose a few questions, and would appreciate any
helpful feedback and comments.
First question:
A month or so ago there was a long discussion about the percentage of
pre-retirement income needed during retirement.
I am not sure this makes sense given the widely varying saving rates people
might have.
For example, we got a late start to investing due to graduate school, but
have had the good fortune to see our income ratchet up quickly. We have not
ratched up our lifestyle at anywhere near the same rate. As a result, we
invest about 50% of our gross annual income toward retirement and college
savings.
Given that we will not need to continue this rate of savings in retirement,
it does not make sense to me to consider percentage of pre-retirment income
needed, but rather to consider percentage of pre-retirement expense that are
needed. Does this make sense, or am i missing something?
Second set of questions:
Assuming I am thinking about this the right way, I would like to lay out our
financial goals, where we are currently, and how we plan to get there.
Would like to hear feedback on whether or not we are on the right track and
any changes you would suggest.
Demographics:
Married, both age 40.
Two kids age 9 and 6
Goals:
Early retirement (semi-retirement) in 5-7 years with comfortable, but
not extravagant lifestyle, including some travel, pursuit of hobbies, and
perhaps part-time teaching and/or consulting.
College expenses for two children
Leave some inheritence to charity and future generations
Current Finances:
Income: Me: $240-260k/yr (depending on yearly bonus)
Wife: Currently at home with kids, may go back to work
part-time, (earning potential ~$30k, part-time, but not included in
planning)
Invetsments: A little over $1M total
~$300k in 401k
~$250k in various IRAs
~$400k in brokerage acct.
~$100k in 529 college saving accounts
Home: Approximate value of $400k with $150k mortgage (15 yr, @5%, 11 yrs
left).
Inheritence: ~$300k in Trust, intended mainly for emergency needs
Living expense: After investments and taxes, current living expenses
approximately $80k/yr (including $2k/mo mortgage)
No other debts aside from the mortgage.
Plan:
Continue Savings (next 5-7yrs): 10% of income into 401k (plus 100%
company match) , some it goes in after tax, but grows tax deferred.
10k/yr into 529 plans
~$50k-60k/yr into
brokerage acct.
Semi-retirment (in 5-7yr): Assume part-time income ~$40-50k/yr
Additional expenses:
10k/yr health insurance
10k/yr travel (beyond what we spend currently)
Full retirement in 12 yrs: Mortgage goes away, most other
expense about the same as semi-retirement years
Planning 4% (or less) withdrawal rate based on Monte-Carlo simulations.
Goal is to not draw down principal, such that at end of plan (sic!)
there is some inheritance for charity and future generations
Does this plan hold water?
Where are the holes?
What else should i be considering?
Final set of questions:
My investing goal is to basically create a well diversified potfolio of low
cost mutual funds (I do not believe i have the skills or time to try to beat
the market consistently. If the pros can't do it, what hope do i have). I
have tried to create a portfolio that include the various Morningstar style
boxes represented by mutual funds that have good track records. I am a bit
concerned that i have created a slightly expensive Total Market Index
porfolio. Anyway, here are my investment choices. Any feed back would be
appreciated:
Core holding (Large Growth?) : Fidelity Spartan Market Index (S&P index),
20%
Large Value: Excelsior Value & Restructuring 10%
Mid Growth: Baron Growth 5%
Mid Value: Fidelity Low Priced Stock 10%
Small Growth: Buffalo Small Cap 10%
Small Value: Allianz Small Cap Val 5%
International: Fidelity Diversified International 15%
Sector: Vanguard Healthcare 5%
Fidelity Select Electronics 5%
Bonds: Fidelity Investment Grade 10%
Cash: CD ladder 5%
Too aggressive?
Not aggressive enough?
Any holes?
Any suggestions?
Sorry for the long post, but i often see questions replied to asking for
more details before suggestions can be made, so i figured i would provide as
much info as i could think of in hopes of getting helpful feedback.
I hope answer to my specific situation will also provide information and
insights that are more generally applicable to others as well.
Thanks in advance for all your guidance.
Best regards,
Marco Polo
joetaxpayer
Marco Polo wrote:
> First question:
> Given that we will not need to continue this rate of savings in retirement,
> it does not make sense to me to consider percentage of pre-retirment income
> needed, but rather to consider percentage of pre-retirement expense that are
> needed. Does this make sense, or am i missing something?
Current income is only a starting point for the discussion. That thread
contained many posts, (you may recall I cited a Barron's story which
offered one view and a WSJ story which leaned the other way), you can
adjust for expenses that will end, such as current retirement savings,
mortgage, college savings. But be sure to adjust for some expenses that
may rise.
> Second set of questions:
> Demographics:
> Married, both age 40.
> Two kids age 9 and 6
With over $1M in savings and a savings rate of 20%+ you are well on
track. The fact that your annual expenses are nowhere near current
income means you do not fit the "80%" rule for retirement needs. Working
part time till the mortgage is paid means you will have those extra
years of growth to your savings with little need to withdraw. Looks good
to me. At final retirement, your cash/bond position needs to be a bit
higher, I believe the MC simulations note an optimum mix is 60/40
Stocks/Bonds. I find your sector choices interesting, but not an issue.
You keep this on an excel sheet? It's a great tool to forecast numbers
based on your assumptions.
JOE
Marco Polo
Thanks for the feedback. Your contributions to the newsgroup have always
been very helpful. So, i am glad you took the time to respond.
Some follow-up:
>>But be sure to adjust for some expenses that may rise.
I have added 10k/yr for individual health insureance
Also, 10k/yr for additional travel/leisure expense, we already spend about
10k/yr, so total of 20k.
I am adding those on top 100% of my current expenses
Are there other expense that typically rise in early retirement that i
should be considering?
>>At final retirement, your cash/bond position needs to be a bit higher
I have started considering this. My new investments are more aimed toward
cash and bonds.
I have so far refrained from selling equity funds to increase the bond
balance to avoid the associated taxes.
Does it make sense to slowly increase cash/bond holding to close to 30-40%
over time through new investments, or should i consider more drastic
re-balancing?
> I find your sector choices interesting, but not an issue.
I would like to hear your take on what you find interesting.
>You keep this on an excel sheet?
I have not done that yet (may try it).
I use Quicken to keep track of everything.
I have found (advanced) Firecalc (http://www.firecalc.com/) pretty useful
for doing the MC simulations and what-if scenarios.
Do you have other tools you use?
Best regards,
Marco Polo
"joetaxpayer" <joeta...@nospam.com> wrote in message
news:K_2dnRR2fZ0cJ-bb...@comcast.com...
======================================= MODERATOR'S COMMENT:
Please trim the post to which you are responding. "Trim" means that except for a FEW lines to add context, the previous post is deleted.
Sandra Loosemore
> >>At final retirement, your cash/bond position needs to be a bit higher
> I have started considering this. My new investments are more aimed toward
> cash and bonds.
> I have so far refrained from selling equity funds to increase the bond
> balance to avoid the associated taxes.
> Does it make sense to slowly increase cash/bond holding to close to 30-40%
> over time through new investments, or should i consider more drastic
> re-balancing?
The problem I've had with using new contributions to shift my asset
allocation is that, now that I'm getting closer to retirement, the new
contributions are but a small fraction of the overall pot, and with
stocks having been on a tear for years now, even putting 100% of my
new money into bonds wasn't enough to keep up with the growth of the
equity part of my portfolio. I guess that's good :-) but I was
starting to get close to my minimum retirement savings goal I decided
it was time to start paying serious attention to reducing risk.
Anyway, if you want to increase your bond holdings, the obvious place
to start is in the 401(k) account, where you don't take a tax hit from
selling your existing investments. Personally, I've decided the optimal
mix is regular bonds in 401(k) and munis in my taxable account while
keeping my Roth IRA 100% in equities.
-Sandra the cynic
Sue
> Does it make sense to slowly increase cash/bond holding to close to 30-40%
> over time through new investments, or should i consider more drastic
> re-balancing?
read this article and access all the links, inside you will find the minutes to the
bogleheads meetings with more details on the discussions with jack
http://news.morningstar.com/articlenet/article.aspx?id=196870&pgid=wwhome1a
just to be clear, here is one such link
http://www.bylo.org/temp/DH_VI_Notes_20070618_Final.htm
======================================= MODERATOR'S COMMENT:
Thank you for an excellent job of trimming the previous post.
BreadW...@fractious.net
> ratched up our lifestyle at anywhere near the same rate. As a result, we
> invest about 50% of our gross annual income toward retirement and college
> savings.
> Given that we will not need to continue this rate of savings in retirement,
> it does not make sense to me to consider percentage of pre-retirment income
> needed, but rather to consider percentage of pre-retirement expense that are
> needed. Does this make sense, or am i missing something?
It's perfectly sensible and something we've talked about
here before. Other things which used to be part of the
computations which may or may not be reasonable assumptions
now: mortgage payments - it used to be more common for
folks to actually pay off their house over the years
and by the time they retired, their monthly expenses
also went down by the amount of their mortgage payment.
Similarly, if you assume your kids will have finished
college by then, you may not need to budget for collee
savings/payments as part of your retirement expense
projections. Of course, these days, folks don't seem
to be paying off their houses and kids seem to stay in
school/return home longer and to greater ages than they
used to, so these things may need to be considered
differently now.
In addition to thinking about saving enough to cover
what your expenses are now, bear in mind that depending
on how and when you retire (or "retire") you may get
*new* expenses - a huge one folks need to think about
now is healthcare/health insurance. If your employer
is picking up all or most of the tab on your insurance
(as is the case for the vast majority of employer-
provided insurance), plan on that expense going way
up, not staying level or going down.
> Demographics:
> Married, both age 40.
> Two kids age 9 and 6
College in 9 and 12 years, at least one year likely of
overlap (ie. more than one kid in school - maybe more
if you count grad school, too), theoretically done by
the time you folks are in your mid 50s.
> Invetsments: A little over $1M total
> Inheritence: ~$300k in Trust, intended mainly for emergency needs
> Home: Approximate value of $400k with $150k mortgage (15 yr, @5%, 11 yrs
> left).
Fully paying off that mortgage (I wouldn't acccelerate it -
that's some cheap borrowing!) will lower your cost of
living a *lot* when that hits. (I'm estimate your
principal and interest payments at about $1500/mo,
noting that your insurance and taxes don't go away -
that's $18000 (okay, after-tax equivalent, since
after it's paid off, you don't get that deduction
anymore, is probably closer to $16,000 "expense"). That's
a huge part of your $80/yr living expenses.
> Plan:
> Continue Savings (next 5-7yrs): 10% of income into 401k (plus 100%
> company match) , some it goes in after tax, but grows tax deferred.
> 10k/yr into 529 plans
> ~$50k-60k/yr into brokerage acct.
That's a great plan. Between reasonable growth of your
current $1.3MM to approx $2MM over 6-7 yrs at about 8%/yr,
and the additional $80k or so you'll be adding (if we
forget the growth of that part, that may be as much as
another $600k.
You end up with a mix of both after-tax and pre-tax assets
worth approx $2.6MM - which may well be enough to throw
off enough income to support you in your current lifestyle
without necessarily even needing to continue to work -
at least it'll do that pretty comfortably after you pay
off that mortgage a few years after your targetted date.
> Semi-retirment (in 5-7yr): Assume part-time income ~$40-50k/yr
> Additional expenses: 10k/yr health insurance
I'm sadly afraid that that may be a *low* estimate on that
health insurance, but that part-time income makes up for a
lot - a hell of a lot.
Bear in mind in the above I've not segmented out your
kids college savings, nor considered the vast *increase*
in your spending during those college years. If we assume
that the savings we've projected above supports your current
lifestyle without the additional work (part time or whatever),
then that part-time work may well pay for the college costs
directly and when the kids are finished, that part-time
work money is more like found money.
> 10k/yr travel (beyond what we spend currently)
Between the travel and the insurance, your expenses go up
by more than you'll save by having paid off that house.
> Full retirement in 12 yrs: Mortgage goes away, most other
> expense about the same as semi-retirement years
Well, again, that may need to wait until the kids finish school.
I haven't looked at your actual portfolio details - I just
don't have the time at the moment, but something to consider,
just becuase I find it interesting: Take a look at the
long (*long*) record of the Vanguard Wellington fund.
It's roughly 65/35 stocks/bonds and has had a return
since inception (in 1929 - that's almost 80yr record!)
of a bit over 8%/yr - with less volatility than a stock
index and a fairly conservative management style. I find
that a very impressive and reassuring record. You certainly
can't afford to be any more conservative than that if
you really want to hit those goals you've laid out, but
you also don't have to swing for the fences - you've built
a very respectable savings and are on a good track.
--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting
cam...@earthlink.net
> Planning 4% (or less) withdrawal rate based on Monte-Carlo simulations.
> Goal is to not draw down principal, such that at end of plan (sic!)
> there is some inheritance for charity and future generations
You are doing really well. Congratulations!
Of course people want ot look at the problems in their strategy.
It is important to figure out the age you retire, your annual expenses
and nest egg.
I became unemployed at 48, so I am familiar with longer than average
retirment periods. At age 53, you have a
long, long way to go.
If I understand correctly you essentially have a $100,000 a year
lifestyle ($80,000 + $20,000) that you wish to continue.
Assume 3% infllation. 20% Federal tax rate and 9.2% state tax rate.
This will be $151,000 a year expenses at age 53. It will be $367,000
a year at age 83.
I've simplified things a bit, but you may be interested in the
results, none the less.
Let's say you now have $300,000 at 5% and $1,000,000 at 9%. At 53 you
have $515,000 at 5% and $2,200,000 at 9%.
You are a bit ahead of breaking even. At age 58 your expenses and
income are equal. ($175,000/yr). After this you are spending down.
You go broke at age 81.
If you only get 7% on your investments, you have $1,900,000 at age
53. Don't even ask about 4% inflation.
You are doing really well. You will need to adjust to the fact that
you don't have a quarter million dollar income anymore
and anything you do to reduce expenses pays off in spades in future
nest egg.
Dennis P. Brown
> selling your existing investments. Personally, I've decided the optimal
> mix is regular bonds in 401(k) and munis in my taxable account while
> keeping my Roth IRA 100% in equities.
>
> -Sandra the cynic
>
This is usually not the optimal asset location. Most of the time it
is more optimal to fill up tax deferred accounts with bonds and
after-tax accounts with tax efficient equities.
Sandra Loosemore
> Sandra Loosemore wrote:
> > selling your existing investments. Personally, I've decided the optimal
> > mix is regular bonds in 401(k) and munis in my taxable account while
> > keeping my Roth IRA 100% in equities.
>
> This is usually not the optimal asset location. Most of the time it
> is more optimal to fill up tax deferred accounts with bonds and
> after-tax accounts with tax efficient equities.
The list I've seen posted in various places (for instance,
http://socialize.morningstar.com/NewSocialize/asp/FullConv.asp?forumId=F100000015&lastConvSeq=59346 )
ranking investments from least to most tax-efficient is:
Hi-Yield Bonds
Taxable Bonds
TIPS
REIT Stocks
Stock trading accounts
Small-Value stocks
Small-Cap stocks
Large Value stocks
International stocks
Large Growth Stocks
Most stock index funds
Tax-Managed Funds
EE and I-Bonds
Tax-Exempt Bonds
So, I'm trying to start at the ends, and work my way towards the
middle. As far as division between 401(k) and Roth accounts, I ran
some numbers which I posted here a few months ago that showed it made
more sense to hold the highest-returning asset classes in the Roth.
That means taxable bonds go in the 401(k). (Specifically, I hold LSBDX
in an old 401(k) plan from former employer, FBNDX in my current employer's
plan, and VMATX and PRFHX in my taxable account.)
-Sandra the cynic
joetaxpayer
Marco Polo wrote:
> I have added 10k/yr for individual health insureance
> Also, 10k/yr for additional travel/leisure expense, we already spend about
> 10k/yr, so total of 20k.
> I am adding those on top 100% of my current expenses
> Are there other expense that typically rise in early retirement that i
> should be considering?
Medical/Travel/Leisure covers it, I think.
> Does it make sense to slowly increase cash/bond holding to close to 30-40%
> over time through new investments, or should i consider more drastic
> re-balancing?
I would adjust slowly as you approach (final) retirement. (Unless you
are clairvoyant and can switch to the right mix just as the market
reaches its next top).
>>I find your sector choices interesting, but not an issue.
>
> I would like to hear your take on what you find interesting.
Only that I happen to own only two sectors funds and they are the two
you have, VGHCX and FSELX. I don't know the odds of this, but I'm sure
it's small. I think healthcare has more growth potential at this point
than electronics. There are some walls technology seems to be hitting
and the market (consumer) is always expecting price decreases. The SOX
index hasn't recovered from the bubble, not even close.
>>You keep this on an excel sheet?
>
> I have not done that yet (may try it).
I have a sheet posted at http://www.joetaxpayer.com/spreadsheet.html
which is a step in the right direction for planning, in general. It's
straightforward, easy to manipulate. I've not used quicken, never tried it.
JOE
wadner
You are doing quite well. But you fail to mention how you are
protecting your money. It takes a life time to earn but only a moment
to lose it.
Marco Polo
I am always looking for opportunities to become better informed.
Best regards,
Marco Polo
"Sue" <s...@cbc.cn> wrote in message
news:5e1vsaF...@mid.individual.net...
Marco Polo
> I would adjust slowly as you approach (final) retirement. (Unless you are
> clairvoyant and can switch to the right mix just as the market reaches its
> next top).
>
I definitely do not believe I am that good, or that lucky.
>
> Only that I happen to own only two sectors funds and they are the two you
> have, VGHCX and FSELX. I don't know the odds of this, but I'm sure it's
> small. I think healthcare has more growth potential at this point than
> electronics. There are some walls technology seems to be hitting and the
> market (consumer) is always expecting price decreases. The SOX index
> hasn't recovered from the bubble, not even close.
>
That is quite a coincidence! I got into VGHCX quite a while ago, and it has
been very good to me.
With the aging bay boomers, i agree with you that Healthcare is probably a
pretty good place to be going forward as well.
I got into FSELX shortly after the tech debacle in 2000-2002. I figured it
had to bounce back strong after that kind drop, still waiting... At least,
i missed the worst of it. I got worried when there were three companies
trying to sell 50lb. bags of dog food over the internet.
> I have a sheet posted at http://www.joetaxpayer.com/spreadsheet.html
> which is a step in the right direction for planning, in general. It's
> straightforward, easy to manipulate. I've not used quicken, never tried
> it.
>
> JOE
>
Thanks for the link, i will try playing around with it.
Best regards,
Marco Polo
Marco Polo
have.
I am not real happy with the bond fund choices in my 401K.
So, what i am thinking about doing (in addition to directing more of my new
contributions into bonds) is having all distributions (dividend and CG) put
into my core account, rather then being re-invested. I can then move this
money that has already been taxed into bond finds to help ba;ance it out a
bit more.
Thanks,
Marco Polo
Marco Polo
> In addition to thinking about saving enough to cover
> what your expenses are now, bear in mind that depending
> on how and when you retire (or "retire") you may get
> *new* expenses - a huge one folks need to think about
> now is healthcare/health insurance. If your employer
> is picking up all or most of the tab on your insurance
> (as is the case for the vast majority of employer-
> provided insurance), plan on that expense going way
> up, not staying level or going down.
>
>
Healthcare is probably the one thing that has me the most concerned about
retiring early.
The inflation rate for healthcare seems very high, and somewhat
unpredictable.
> That's a great plan. Between reasonable growth of your
> current $1.3MM to approx $2MM over 6-7 yrs at about 8%/yr,
> and the additional $80k or so you'll be adding (if we
> forget the growth of that part, that may be as much as
> another $600k.
> You end up with a mix of both after-tax and pre-tax assets
> worth approx $2.6MM -
We are actually adding about $120K/yr of new money into investments. So,
hopefully we will get closer to about $3M, when the time comes.
> I'm sadly afraid that that may be a *low* estimate on that
> health insurance, but that part-time income makes up for a
> lot - a hell of a lot.
This does have me concerned. Any thoughts on ways to hedge the inflation in
health insurance?
Best regards,
Marco Polo
Marco Polo
<cam...@earthlink.net> wrote in message
news:1182526246.4...@m37g2000prh.googlegroups.com...
> On Jun 22, 2:05 am, "Marco Polo" <M...@Polo.com> wrote:
> At age 53, you have a
> long, long way to go.
>
I appreciate the fact that this can leave a very long time in retirement
where the investments must provide adequate income for a long time.
That is why i am trying to use relatively conservative estimate in my plan,
and trying to build in quite a bit of cushion on top of that. Only time
will tell how well i accomplished that.
> If I understand correctly you essentially have a $100,000 a year
> lifestyle ($80,000 + $20,000) that you wish to continue.
> Assume 3% infllation. 20% Federal tax rate and 9.2% state tax rate.
> This will be $151,000 a year expenses at age 53. It will be $367,000
> a year at age 83.
The effective federal and state tax rate seems a bit high, I have been using
a combined effective rate of 20%
I live in a fairly low income tax state.
> Let's say you now have $300,000 at 5% and $1,000,000 at 9%. At 53 you
> have $515,000 at 5% and $2,200,000 at 9%.
I am not sure i fully understand how you arrived at these numbers. At 9% (i
use 8% in my planning), over 12 years, invest grows by factor of 2.81
(1.09^12). This would turn the 1M into 2.8M. I may need to withdraw some
from that in years 5 or 7-12, but i am also adding $120k/yr for years 1-5 or
7.
Could you elaborate a bit, in case i missed something?
>You will need to adjust to the fact that
> you don't have a quarter million dollar income anymore
> and anything you do to reduce expenses pays off in spades in future
> nest egg.
>
It is more of a mental adjustment rather then a financial one. Out of that
250k, i never see about $120k of it (directly into investments). I am
paying taxes on the entire 250k out of the rest, then living on the
remainder. So, financially i am already used to having much less then 250k
to live on. But emotionally, it sure is nice peace of mind, that will take
some adjustment, as you suggest.
Thanks for the feedback.
Best regards,
Marco Polo
Marco Polo
"wadner" <wad...@hotmail.com> wrote in message
news:1182552868.2...@j4g2000prf.googlegroups.com...
I will assume you mean insurance?
I have quite a signficant life insurance policy on myself, and a reasonable
one on my wife.
Disability Insurance and Health Insurance through work currently
We have a Umbrella Liability Policy about 2x our investments.
Will likely add Long Term care policies as we get a bit older.
Anything additional you think we should be doing to protect our assets?
Thanks,
Marco Polo
cam...@earthlink.net
> <camg...@earthlink.net> wrote in message
> The effective federal and state tax rate seems a bit high, I have been using
> a combined effective rate of 20%
> I live in a fairly low income tax state.
>
> > Let's say you now have $300,000 at 5% and $1,000,000 at 9%. At 53 you
> > have $515,000 at 5% and $2,200,000 at 9%.
>
> I am not sure i fully understand how you arrived at these numbers. At 9% (i
> use 8% in my planning), over 12 years, invest grows by factor of 2.81
> (1.09^12). This would turn the 1M into 2.8M. I may need to withdraw some
> from that in years 5 or 7-12, but i am also adding $120k/yr for years 1-5 or
> 7.
> Could you elaborate a bit, in case i missed something?
My model pays taxes every year. This doesn't compound perfectly for
long term capital gains over multiple years, but it is close. I
belieive those pesky dividends get taxed every year even if you re-
invest them.
As an aside, a lot of the "hot" investments like energy and
internationals were bought and sold in less than a year, and could
have paid upto mid 30% federal tax short term capital gains.
Sometimes you have to get in and out when the gettin's good and
waiting a year won't cut it.
Let's assume the new case of $1,000,000, 9% return and a one time
capital gains tax of 20% (federal and state).
After 12 years the $1,000,000 does grow to $2,812,664 pre-tax. After
a 20% tax on profits you are left with $2,450,131.
You seem to be pretty good with numbers, so I don't think this will
come as any surprise.
Good Luck
BreadW...@fractious.net
> > I'm sadly afraid that that may be a *low* estimate on that
> > health insurance, but that part-time income makes up for a
> > lot - a hell of a lot.
>
> This does have me concerned. Any thoughts on ways to hedge the
> inflation in health insurance?
Um, overweight investment in healthcare stocks?
(not really kidding, either...)
(And like a couple of other folks here, I, too, have
some VGHCX in my mix.)
rick++
> Healthcare is probably the one thing that has me the most concerned about
> retiring early.
> The inflation rate for healthcare seems very high, and somewhat
> unpredictable.
I've noticed that open market health care doubles in cost every five
years
since I started tracking it in the 90s. This includes what you
actually
pay in addition to premiums. Some years the increase is in the
premiums
and other years they increase the co-pays and deductables.
The numbers will be astronomical in retirement years.
The scariest thing is that medicare is on the same five-year doubling
curve,
just starting at a lower point.
Its month premiums are skyrocketing ($121 a month this year for
part B & D) and means-testing is phasing in.
You might find, say you reach medicare age in 2020 that your personal
policy of $1500 per month falls to the medicare rate of a mere $500 a
month if the trend continues.