A little about Health
If you’ve ventured into other FI blogs you likely have found an entry or podcast about healthcare and how it relates to finances. Spoiler alert for those that haven’t: healthcare is a tricky consideration particularly for the United States because health insurance is overwhelmingly attached to your employment. So, what do you do if you don’t want to work but have a decade or more before Medicare foots the bill?
The easiest way to stop the gap between early retirement and 62 (Medicare) is the ACA. The affordable care act has some loopholes that take some fancy footwork in the (spread)sheets. Essentially, when you start “paying yourself” with your investments, that “salary” you give yourself can be treated like your income. I am a family of 3 so I’ll be using those numbers, be advised the source above has a chart with numbers for your family size. For a family of 3, the poverty line is defined as $23,030 in 2022. Per the sliding tax credit scale at the bottom. If your income is between 100%-400% of that poverty line you will qualify for tax credits. So if your income is between $23,030 and $92,120 you will be eligible for tax credits on the ACA marketplace.
To put that in perspective, if I am in retirement living off of my investments, you can withdraw from your taxable brokerage account, up to $80,800 (married filing jointly) and still owe 0% taxes. So, even if you max out your 0% capital gains tax bracket, you still have another $12,000 to go before you’re out of tax credit range in the ACA. Not that bad. The ACA is a great tool for several categories, not all. I recognize that if you are a W-2 employee earning an average of $50,000 the ACA is not super great.
Now, that’s how some of the numbers work. Let’s talk about another, not so talked about way to mitigate healthcare costs particularly in a long retirement: lifestyle. Nerd Wallet estimates that from age 65 and above you can expect to spend $5,000/year on healthcare premiums. Five thousand dollars times a normal 30 year-retirement is a total of $150,000 and that is likely back loaded toward the end. If you retire earlier than 65 with relative health you might expect to average out to less than that, but still, healthcare is something to consider.
But for all the relative youngsters out there reading this, let’s talk about what we can do now to maybe avoid a lot of health related expenditures altogether. As a disclaimer: while I do work as a healthcare professional, nothing I am saying here should be considered official health advice – go talk to your doctor.
The World Health Organization has listed a myriad of risk factors to avoid common noncommunicable diseases. Notice this list does not really talk about Alzheimer’s or cancer which have much more to do with things we can’t control. But the list of risk factors for diabetes, hypertension, Chronic Obstructive Pulmonary Disorder, and addiction mostly include the following:
Poor Diet
Sedentary Lifestyle
Smoking/Tobacco use
Obesity
Alcohol use
Each of those are things we can control. I am going to highly recommend you do a few things each day to keep your risk factors low.
Get off the couch and move at least once per day. I am not talking about being an athlete here. Just walk briskly for 20 minutes. Do something that gets your heart rate above 110 bpm and keeps it there for about 20 minutes or so. If walking around the grocery store achieves this, do it. Don’t use the scooter, walk the store.
In association with the above, eat better. Fruits, Veggies, Beans. Plant based foods are fantastic. Don’t go crazy for these fad diets. No matter how many superpowers Trader Joe’s promises you, if you only eat Acai berries, you won’t be able to fly. But put down the soda.
Quit smoking or using daily tobacco. Work towards it find a cessation program, something. I promise you it will pay dividends later if you quit now. In my career I have had patients that smoked packs/day for 20 years but have quit 20 years ago, and you would never know they were smokers.
Find time for your mental health. Just a minute per day of deep breathing. There are a ton of apps out there to help with this. Just take time to center yourself, and find contentment with yourself even for a moment.
