| Wednesday, August 27, 2008 |
| early retirees getting shafted by current economy |
The USAToday story: Some early retirees have second thoughts points out how the current economic conditions (falling stock market, vanishing home equity, rising prices) are hitting the newly retired particularly hard. Many older Boomers — including those, like Paganucci, who have yet to turn 62 — say they're willing to accept a smaller payout in exchange for an opportunity to retire while they're still young enough to enjoy it. But recent retirees who had expected to supplement Social Security with their savings have seen their investments decimated by the stock market's nose dive. Their home equity has evaporated. And rising prices for gas, airfares and groceries threaten to shred their retirement budgets.
Even well-off retirees have been unnerved by the economic downturn. Austin Frye, a financial planner in Aventura, Fla., says several of his clients who are retired physicians were accustomed to seeing their pre-retirement pay rise at the rate of inflation.
Now, he says, the value of their investments and real estate holdings has fallen, while their cost of living is surging.
[...]
In 1991, according to Hewitt Associates, 88% of large employers subsidized health care coverage for early retirees. In 2007, only 45% did so.
That means most workers who retire before 65, when they become eligible for Medicare, need to find another source of health insurance, says Rick McGill, head of retiree medical consulting for Hewitt Associates. Individual insurance policies are often prohibitively expensive — if they're available at all. Twenty percent to 40% of early retirees who apply for an individual insurance policy are either denied coverage or charged a higher premium than other policyholders because they're considered high-risk, McGill says.
If you retire before 65 and your employer doesn't offer retiree health care, McGill says, "You better hope your spouse has coverage or (you) work for an employer for enough hours that you can get some coverage."
Rainee Adamson, 59, of Glendale, Ariz., retired from her job in the computer industry in 2003. Her husband, Robert, 61, retired not long after that. Rainee says she doesn't regret retiring, because she has more time to help care for her 86-year-old mother, who lives in an assisted-living facility. But she was unprepared for the cost of health care.
The Adamsons tried to buy individual health insurance policies but were rejected because both have high blood pressure and high cholesterol levels. They were able to get coverage through Adamson's former employer. But the premiums have risen each year, from $800 a month a few years ago to $1,300 a month now. |
| posted by Boston Gal @ 8:42 AM *
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| 7 Comments: |
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it seems that healthcare will be the great unknown for us middle aged people. who knows what will be the cost of healthcare will be in 25 years, and the difficulty in planning for the unknown...perhaps its time to invest in more healthcare related stocks!
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maybe they should not have retired. They knew they would not have health benefits for 5 years and should have planned for that by purchasing supplamental insurance ealier in life or saving more money. Retiring, and retiring early is a choice.
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Even if they'd waited to age 65 to retire, it's not like Medicare is sufficient health insurance. You still have to purchase a supplemental policy (nickname is "Medigap") to cover all the stuff Medicare won't.
My mother's Blue Cross "medigap" policy costs more than $800 per month, and she did not retire until well past 65.
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Yet another argument for the "socialist liberal" Obama to win this year.
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A couple of years back, one of our local factories closed. Early retirees completely lost their healthcare benefits ... I felt really bad for these people. I mean, they expected to have healthcare as part of their retirement package ... then BOOM!
I feel fortunate that our generation at least knows that the loss of retirement benefits during retirement is a possibility. For a lot of early retirees and "pensioners" the possibility that this "guaranteed" benefit would disappear was not even fathomable. I know my parents (early retirees) had a big fat sigh of relief the minute my Dad (an early retiree who received healthcare benefits from his former employer)turned 65 and was elgible for medicare. My Mom was so fearful that his healthcare benefits would be cut ... it was not even a consideration that it was a possibility when he retired 12 years ago.
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Sucks to be you guys. Its amazing how American politicians always talk about the American Dream which to people here in Europe sounds like a nightmare. I am squarely in the middle-class and I have excellent health care for life, much better than you can get in the States and we have a longer life expectancy and higher quality of life. We vacation for several weeks each year and tour the world, everyone is able to save ample amounts of money, and so on. We work to live not live to work. My job is just a part of my day, by the late afternoon I join several friends for drinks and socializing, eventually turning into night and sitting down for a nice long dinner at great restaurants. My weekends are spent at the beaches, exploring the city, or traveling to nearby countries. All of this earning the equivalent of about $55,000 USD. Worrying about things like having ample health care or retirement savings is strictly an American problem amongst developed countries. We value life and the short precious time we have on this planet. Enjoy living!
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I count myself extremely fortunate to be 'grandfathered' into healthcare coverage upon retirement by my employer - a benefit that is no longer being offered to new employees. I plan to retire in 2010 at 62. At first I thought $300 a month for single coverage was excessive but I guess I should count my lucky stars. And it is decent coverage - Tufts HMO. At 65 I can also get the Medigap coverage.
But I still believe that Medicare should be expanded and offered at least as an alternative to the other third party payers.
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it seems that healthcare will be the great unknown for us middle aged people. who knows what will be the cost of healthcare will be in 25 years, and the difficulty in planning for the unknown...perhaps its time to invest in more healthcare related stocks!