Wow, lots of responses and useful information. Thanks to everyone who's responded so far!
hicabob wrote:Probably obvious - but getting/staying healthy should be a priority which keeps costs down and retirement fun up, so listen to the doc when he tells you to exercise 4 times/week or more and get that BMI under control.
Good advice. As a commuter cyclist, I think I've got this one under control
Raybo wrote:I retired in 2000 at 48. I've always paid for my own health insurance and know that I can expect 10% increases year after year from Kaiser, my insurer. While I find this increase outrageous, that estimate has been accurate for past 15 years or so.
In my retirement model, I assume that medical costs will grow at 10% per annum until I am 65. At that age, I assume they will continue at that rate, but not increase. I have no idea what medicare coverage will cost me but am assuming it won't be any higher than approximately 75% higher than what I am paying now (about $600/mo).
Ultimately, you have to decide if you want to work longer to have more of a cushion or retire earlier and run the risk of running low on money at an advanced age. Only you can decide how to play that trade-off.
My spending is still well below a 4% burn rate so even with escalating health insurance costs, I am keeping my expenses down to where I feel comfortable.
I know health insurance costs are outpacing inflation by a wide margin which is scary to me. When I figure how much annual income I'll need in retirement (in current dollars) I usually inflate the estimate by a bit, but as health insurance costs have continued to increase so much I find it hard to predict how much it will actually cost me per year. 10% annual increases indefinitely seem unsustainable, both for my retirement planning and for insurers as a whole. Hopefully the ACA will provide some relief, although I'll admit I know very little about it. I'll have to do some research.
Rich in Michigan wrote:Does your employer allow you to continue enrollment in their group medical plan, albeit with higher premiums?
Both my wife and I retired at 60 and we both had that option with our respective companies, either as individuals or family coverage. Yes, the premiums went up markedly, and no the employer no longer contributed, but ours is still a good deal. Great coverage at a better price than we could get on the open market.
You should investigate that if you have not done so already.
Planning for medical costs is an important factor in any retirement decision and even more so for early retirees.
This may very well be a possibility in the future, but it's nearly impossible to predict what company I will be working for when I retire. I'm still pretty young (26), and although I like my current employer I'm likely to switch employers multiple times throughout my career (I've already changed full-time jobs once since graduating college). When I get within a few years of my projected retirement age, I'll investigate this option but for now I'm assuming it won't be possible as I create my retirement plan.