January 7, 2014
Typically, my clients stop working and retire for a lot of different reasons, including loss of mobility, burn out, difficulty finding work, and desire to spend more time with family. Those are all great reasons and there are many more. In fact, people usually don't have trouble coming up with reasons to stop working by the time they reach their 60's!
The more difficult question that I answer is, "When can I retire"?
One of the big obstacles today is the ever increasing cost of healthcare. In the past, buying insurance as an individual simply wasn't very common due to the astronomical costs. Most of the people I'd see retiring at 62, or even earlier, were able to stay on their employer's plan or on a spouse's until they enrolled in Medicare at age 65. Because of the Affordable Care Act, costs have come down locally and are now closer to what many retirees end up spending on Medicare and supplemental insurance. This will open up some options for individuals who were ready, but in the past were not able, given the associated costs.
The other big news is that for 2012, medical spending in the U.S increased only 3.7%. While that may not look like a great number, it's the fourth year in a row we've been below the 4% mark and the experts are starting to use the terms like slowdown and trend to describe the changes that are occurring.
The "why" in this situation is a little bit harder to determine. Supporters of the Affordable Care Act will undoubtedly point to these numbers as a sign that the program is working. Others will claim that the act hasn't had enough time to make an impact, and that this is a reflection of a depressed economy and individuals steering clear of their doctors. There are also other trends in the marketplace which include a trend towards high deductible plans which are being coupled with health savings accounts instead of managed care options, like HMO's that are likely influencers.
In a lot of ways, the "why" is extremely important because it's what will help us determine as a nation what is working, and what is not. On the other hand, given all the news of our nation's rapid descent into poor health, obesity, and old age, it's hard not to be excited about this news. All of the recent demographic trends should point to rising costs accelerating; not the other way around.
Maybe we're finally on to something.
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).