Vanguard Podcast: How to think about health care costs in retirement

Brought to you by the guy who wrote “Time To End Financial Advisers 1% Fees”….

And then went to work for a financial advisory firm that charges….you guessed it, 1%, comes this piece;

Notice the use of the word DEVOUR. Now I will save you the follow up comments by folks about how depressing this is because I think that’s the point of this kind of stuff, to depress people. Misery loves company after all.

I’ve now come to the conclusion that retirement think tanks, like every other bureaucracy, have one mission and one mission only; To expand their power. So, what does a think tank like the Center For Retirement Research, which Clements cites here, need to do? Scare the hell out of people. Why? Gets more funding for their research.

They want more people throwing up their hands and saying things like this lady did in response to the above post; “Wish someone would solve this for the people so they are not working full time in the rat race at 70!”

Hmmmm…who could we possibly hire to solve this “crisis”? Oh, the Center For Retirement Research!

See how this works? Kind of like the good folks at the East Anglia Climate Research Unit. The “hide the decline” provocateurs. Scare the population about the horrors of global warming so governments send mass amount of research money to study global warming and then find yourself in positions of power in order to enact solutions to what your research shows is an imminent crisis. If you’ve gotta even manipulate the data to “prove” the crisis exists, so be it.

Great work if you can get it. If only someone would have warned us about these kind of shenanigans… Oh wait, Eisenhower did!
“The prospect of domination of the nation’s scholars by Federal employment, project allocations, and the power of money is ever present and is gravely to be regarded.

Yet, in holding scientific research and discovery in respect, as we should, we must also be alert to the equal and opposite danger that public policy could itself become the captive of a scientific-technological elite.”

That’s crazy talk, Ike!

But let’s also dive a bit deeper into the claim of Clements to begin with, that medical costs DEVOUR (OH NO!) 18% of the AVERAGE retirees income… Any takers as to what’s wrong with this?

Well, if we average my salary with that of Bill Gates we have an average salary of a million gazillion dollars. But that is meaningless as Gates is salary is such an extreme outlier to negate any satisfactory assumption one could make of this “data”.

The outliers ALWAYS skew the averages. There will ALWAYS be an outlier with significant health expenses that will completely invalidate the conclusion Clements draws here. If only there would be a research paper that shows the median health care cost… oh wait, there is!

And, lo and behold, your old buddy Josh has done many a-video on this exact topic! Here is just one. Here is another, oh and another…and many, many others.

Now, on another note, and this one irks me probably more than anything; Why is it the focus always on the 18% health care costs in retirement instead of the other 82%? Where is that money going?

Weird, eh? 18% of an average retirees income is “DEVOURED” by OOP health care costs but not a doggone peep about the other 82%… why?

Well, because that’s for housing, first and foremost. And if we were to focus on housing it wouldn’t create the uncertainty, and thus fear, that the focus on health care does. We all KNOW we need to have a home. We get that, thus there is no uncertainty there. It’s baked into our understanding of retirement.

But we don’t know if we will be the ones with an outlier health cost. Thus if you want to scare people you focus on the unknown, not the known even if the known represents nearly 40% of the average retirees cost.

And that’s why I get frustrated at all these scare tactics. If you’re truly concerned with the average retirees cash flow why are you NOT focusing on the REAL expenses of the average retiree? That would be the cost of housing!

You should be yelling from the rooftops to potential retirees to do whatever they can to reduce their housing costs. Pay off mortgages. Move to low property tax state. Mow your own yard. Change out light bulbs to LEDs. Don’t use your oven in the middle of the summer. Don’t run your automatic sprinklers 4 days a week.

This list goes on and on for ways to reduce expenses that can make a HUGE impact. But the financial media, and their allies in the think tank world, never talk about any of this. It’s too easy and makes too much sense.

How many clicks would a tweet receive that says “Out of pocket costs for average retiree utility bills DEVOUR 15% of their income!” That isn’t nearly as frightening. Why? Because we ALL know this without the need of some Ivory Tower study!

Just remember folks, FEAR leads to irrational behavior. FEAR is the easiest way to lead people. It is always why tyrants make an enemy out of a group of people to establish a fear of that group and thus create that Two Minute Hate. Then the tyrant can say “I am your protector.”

But you need not be a Stalinist in your desire to promote fear. You simply need be someone who receives funding because of the fear you’ve created and thus amazingly the problem will never be extinguished. The monster will always be there, always hiding under your bed ready to pounce. Again, it’s GREAT work if you can get it.

I simply refuse to play the game. You live in the USofA, for Heaven’s sake! The most prosperous society ever know to mankind. Ever. No one is dying from starvation here. No one is without clean water. No one is without access to health care of some capacity.

To live here and be fearful is be inhumane…to yourself. Snap out of it! Count your blessings for they are many!

© Copyright 2018 Heritage Wealth Planning