The Complete Guide To Optimizing Healthcare Costs Before 65

I told you I didn't want to die with this amount of money , just want to make sure you don't retire too early . And I also want to make sure you don't retire too late and go wow , I have plenty of money , but what good is it now ? So a common question I receive is how much is healthcare going to cost me ?

And I don't let people off the hook , and this is where I'll joke and I'll say I'm mean , because a lot of people go , yeah , but how am I going to pay for healthcare ? What is it ? $12 million a month ? I'm like . No , it is a cost .

Yes , it can be significant , but it also can be very low if you're strategic and don't let healthcare be the reason you don't retire early . It's another expense , just like anything . And the beautiful part is you get to be creative based on your income and guys , I have clients .

Right now I have one client that spends about $100 a month on monthly premiums and I have another client that spends about $1,500 a month . And sometimes this client the $1,500 a month one is happier and you're like well , how could that be the case ?

Well , they're doing another tax strategy , whether it be a conversion or harvesting or something else that generates them more than that difference . That makes them go . Well , I'm happy to do that . I'd way rather do this strategy to save me 15 to 20,000 a year . Others go no , I'm retiring at 52 .

And so conversions and all this stuff sounds good , but I want to prioritize getting this subsidy from the government . So I have an episode on YouTube where I bring on Lindia , who's the healthcare expert I use with my clients . So if you want to listen to it , you can see it here .

A lot of people resonated with it , but that's going to be more focused on okay , what healthcare policies exist for me ? Should I look at Cobra ? Should I go to the exchange Today ? Is not that Today's me giving you hard numbers of hey , here's the reality of how much healthcare will cost so that you can plan for it .

And then I encourage you to take these numbers , if you haven't already , and use the Academy tool you can see that in the description so you can start understanding when work becomes optional , not because you're going to actually stop working tomorrow , but so that you can look and go . Okay , I've got a good sense as to how this works .

I think I know exactly when I might be in a good spot and then , wow , maybe work is optional now and maybe I don't need to keep working and maybe some of you go . I'm going to do this other job that pays way less but I enjoy it more . So today is all going to be about .

Here's the healthcare cost , and it is really dependent on your zip code , your healthcare needs , and I'm going to go through this with you Now . I know this is a podcast , so a lot of you are listening right now . Others of you are going hey , are you sharing your screen ? Are you going to be doing stuff on video ? I do both .

I want to make and I explain everything because , guys , I listened to a lot of history podcasts personally and they have a YouTube channel and they also have a podcast . And from Dan Carlin , listening to the podcast I , and sometimes he'll share a visual and he'll .

Sometimes he's great , but sometimes we'll forget to mention something and I'm like , look , I need him to explain it better .

I kind of need to tell him that so I get where you're coming from , where I'm going to try to make this as clear as humanly possible for you , but I do encourage you , if you want to look at what I'm'm showing , go to YouTube and you'll actually be able to see this . So just search Ari Talblee healthcare episode and it'll be the most recent one .

So the point here regarding healthcare , what we're going to be going through today is going to be a lot of fun , because most people actually over project their healthcare expenses , and I'm going to be able to show you guys how we have clients that spend literally $50 a month and clients that spend literally $1,500 to $2,000 a month , and it's totally based on

your healthcare needs , what you're looking for and the flexibility of your income , which is a big thing many people don't plan for . Now , before I do that , I'm going to go through a quick review of the week and then we're going to get to the fun . So , if you don't already know , my name is Ari Talbleep .

I'm a certified financial planner , I am the host of the Early Retirement Podcast and I'm the vice president at Root . So you can see here's a comment from Mary Lamb , 7897 . And here's what she said . She goes Ari . She didn't say Ari , she just commented .

I can tell you I'm at work because I want to be Primarily excuse me because I love the people on my team and we have a close-knit group that works well together and truly supports each other . Plus , I'm quite good at what I do and I enjoy helping others succeed . However , our leadership sucks .

They spelled sucks S-U-X , okay , and the second , another bad decision comes down to us in the masses . It's really freeing to know we can say thanks , but no thanks . It's been fun , but not anymore . My outlook's definitely changed . I no longer sweat the annoying things . I do them if I feel they make sense and if I understand the need .

If I don't , I honestly don't care about the consequences , because in my mind there are none now . Obviously , I work for a big company where I'm simply a number to them , but my smaller team means a lot to me and we've managed to make the most of often bleak situations liberating to know we can walk away if it gets too bleak . I reached out to Mary Lam .

She might be coming on the show in the future kind of preview there . But what is really special about this comment is this is the power of financial planning that this person knows . Financially , they're in a great spot and they're working because they want to , not because they have to .

So a lot of you are probably similar to this , where you're like yep , love my team , I'm at a big company and it's just some of the stuff like imagine if Mary Lamb thought she had to work there every day , it would just suck so much more .

I can just tell her that and I can tell and I've worked at a company where I was there for a paycheck and it sucked . So , even though I'm not at her stage in life , I can resonate in that fashion . But I mainly hear it from my clients all the time . So that's where I want to start Now .

Healthcare , once again , today is not Cobra , and should I look at the marketplace ? And what about short-term insurance plans ? It's a piece of that , but it's mainly the financial side . That's what I'm going to be going through . So before I go into the fun , I tell everyone they still use this phrase at my previous company .

So about 10 years ago I worked at a company I interned I think 10 years , maybe nine , called Northwestern Mutual . Now a lot of you have heard of this . In Northwestern Mutual , it's not me bagging on them . They actually make good life insurance . That's what they do .

But when I was there I'm the type of guy just for all of you to know , if you don't know already I'm very transparent . I'm not exactly loved in the advisor world Now clients like me because I just shoot straight from the hip and I try to give it like like it is .

But when I was at Northwestern Mutual , I was in an office and you know , everyone's got the suits and all that . And I look around and I'm like , okay , I don't know if anyone else is going to ask this question and I'm just curious . So I just ask . That's what I do . So I said , hey , I'm sure it's a dumb policy . I get paid more .

Shouldn't it just be like whatever they need , like what am I missing here ? And at the time my manager says don't worry , wait till you see your bonus . I said , don't worry , I quit because that doesn't make any sense . It should just be whatever people need . So what I'm showing you in a second is I don't care if we use State Farm or Northwestern or any .

I care that any health insurance agent that you talk to is independent . I don't want them to get paid more or less based on whatever compensates them . I just want you to get the best policy . So I partner with independent people , just like I'm independent . For example , I don't care for my clients if we use Fidelity or Vanguard or Schwab or Empower .

I don't get paid by any of those companies . I can use whoever I want . My job is just to make you the most amount of money , and the reason I am that advisor is my parents were burned by Fidelity . Now , fidelity is nice . I actually like Fidelity . They make good products but my mom's like Ari .

My mom's the sweetest person you'll ever meet , but my mom was like Ari . This person sold me this product and I'm sure it's great because they're a nice guy . I go , I'm sure they're nice . Did you ask them , though , what the commission is on what they just sold you ? They're like no , they wouldn't do that .

I could tell you that I go , I'm sure they wouldn't . But when I looked into what was sold , it was good . It wasn't the best product , but it had a higheric . So that's who I am . So what I'm going to now show you on my screen here , this is where , hopping right into the sample , and I'm going to explain it for those of you that are on audio .

This is a healthcare estimation tool that you're going to have access to . Look in the description for more details if you want to see what I'm talking about , but this is a sample , so let's call this me hypothetical . You can see me here . Let's assume this was my zip code 47714 .

And I just I picked the zip code because I was doing this for a client just recently . So you're in Ohio . Okay , let's assume it's a couple . Okay , I'm 52 , my partner's 54 , we have no kids , we have two people in our household and $50,000 , that's our income . That's coming in the door .

Now some of you are like , wait a second , we need more than $50,000 a year . Wait a second , we need more . We're going to talk about that . Just an example . What this is going to say you can see right here on my screen makes it really easy for you . This is the estimation tool that I would encourage you to use .

It says here likely eligible for financial help . This is an estimate of how much of the monthly premium will be paid by the government . So this is pretty cool . What this is saying is $1,050 that you think you have to pay . You don't have to pay , the government will pay this .

And you have to pay $0 for a bronze plan , $144 for a silver plan and $772 for a gold plan . So these are your costs before Medicare before 65 . So these are your costs before medicare before 65 . So what I want you to do is now let's assume your income is a hundred thousand dollars , just a hypothetical . Okay , don't freak out .

So now I all I did was switch it to a hundred thousand . Some of you are like where's the income going to come from ? Well , let's get creative here . Let's assume you don't have a brokerage account . I call that a superhero account that lets your money grow and you can touch it before 59 and a half because you have flexibility .

So let's assume you don't have any of that . Okay , you just have an IRA and you're 60 and you're wondering how much is healthcare going to cost me ? And you go I want to be able to spend a hundred thousand a year . Well , if all hundred thousand exactly comes from your IRA .

What that means is you're eligible for probably 500 bucks a month in financial help . You are going to have a silver plan of $694 a month , so 700 bucks a month . Some of you are like , oh my God , that's so much . Yeah , it's significant , and you plan for it like any other cost .

And you can see your bronze plan 520 with a gold plan of 1400 bucks a month . So if you're listening to this right now , going , okay , what generally could it cost ? $200 to $1,500 a month . It's a wide range here . But now let's go to the next level . Okay , this is me just showing you a sample .

Let's assume now that and you could , of course , do this for whatever zip code yours is I'm just giving you a hypothetical . Let's assume you go Ari , I have an IRA . It has a million dollars . I have a Roth there with $500,000 and I have a brokerage account with $250,000 brokerage account Once again , I called that the superhero .

Now , ari , I don't know what I should do . Do I pull from my IRA , my Roth ? I don't know . In one episode you said let the Roth grow like crazy , so don't touch it . But I don't know what I should do . I said , okay , your brokerage account . Let's talk about it . What do you have in there ?

And they said I've got Apple and Microsoft and a few different ETFs . I go great . Any gains in there ? Yep , I've got gains because it's gone up in value . I go great . Let's assume you sell . You want to have a hundred thousand dollars , okay . So you bought Apple stock .

No-transcript , that's what they want to be able to spend and live and do everything they want to do . Just hypothetical Okay . Now let's assume they bought Apple stock for $10,000 , okay , and now it's worth 100,000 . They have a $90,000 gain . Just hypothetical okay . $90,000 gain . Well , they're gonna have to pay taxes on that gain . Okay .

Now let's assume they're in the capital gains bracket of 15% . They have to pay 15% taxes on that $90,000 . So what that means is they have Apple stock , they sell it . They get to walk away with $100,000 . Okay , they get to do that , but they pay taxes of $13,500 . So what does that mean ? What that means is they're paying taxes on $13,500 .

That's their tax bill . Okay , now they're generating $90,000 of gains . But you have to recognize here that , yes , they just sold this stock . Yes , they pay taxes , but they just sold this stock , meaning there's a gain of ninety thousand dollars , you don't pay on the original . It's just what's the ? How much income is being created ?

Well , if there's a ninety thousand dollar gain , you're only paying taxes of just thirteen thousand , five hundred dollars . Well , what we want to understand is wait a second . That's why I'm going to go through this example with you , because , stick with me , what if just a hypothetical ?

Just humor me for a second , because you can see the numbers here on the screen , whether it be $400 a month , $600 a month , $1,200 a month , what is going to click for you is what I'm going to tell you right now . Let's assume you have $100,000 . You go yeah , I don't know what I should do .

I could put it into this brokerage account , I could put it into a CD , I could do whatever I want . Well , let's assume you have $100,000 just sitting in cash . Okay , you can do whatever you want . That money's already been taxed , okay , so theoretically , your income is zero . You can live off that $100,000 . Stick with me here . So now watch what happens .

What does this say right here ? What this says is you're likely eligible for financial help If you want a silver plan based on your information . You have no income in your zip code , you would pay $0 a month . Some of you are like wait , wait , wait , wait , wait .

Are you telling me that if I don't have any income because I'm living off of cash , that I could maybe pay nothing for healthcare ? Oh , yep , that's exactly what I'm saying . And they're like that's incredible . I go , you don't want to do that . That's level one .

Level two Now , in reality , you probably have dividends and interest and you don't want your income so low . People make this mistake that now they're in the Medicaid category . Okay , so don't make that error , which a lot of people do . But let's assume $20,000 is coming in through dividends and interest or whatever it is .

Or maybe there's part-time income between you and your spouse Just hypothetical here . What if you bring in $40,000 a year ? That's what's coming in the door . You're paying $50 a month , guys , for healthcare . I mean , this is so low . Now , let's assume you don't have a lot of say and you're like you know what ?

I just retired , but I've got this huge pension and Social Security and okay , then , yeah , you're probably looking at north of $1,000 to maybe $2,000 a month . But a lot of you guys are coming to me in this age . You're like , yep , that's me between 52 to 54 . I don't want to pay a ton for health care , but I want to do a Roth conversion .

Now , last week was all about Roth conversions . If you haven't heard that episode , go hear it . But if you want to do Roth conversions , well , let's increase this because we're doing a Roth conversion . So I'm going to enlighten you now . Let's assume you have $50,000 of income that's coming in through dividends and interest , maybe some part-time work .

Well , if you had $50,000 coming in the door hypothetical here okay , $50,000 coming in the door , that's $144 a month that you and your spouse could each pay for healthcare . Let's just call it $300 . $300 a month total , that's $3,600 a year . I could say , guys , you only have to spend $3,600 a year on healthcare .

And you might be like that's pretty cool , ari , and I go yeah , but I want you to do a Roth conversion instead . And you're like well , ari , that's a big difference . That's 2000 a month each . You told me before it was 3,600 . Now you're recommending that it's 24,000 . What the heck's going on ? Excuse me , even my chest freaked out right there .

The Jewish digestive system has acid reflux . Okay , guys , just bear with me there . Sorry about that . So what I want to show you now and this is the power of good planning is whenever we're looking at okay , let's get strategic here . What should we do ? Should we do these conversions ? What about these subsidies ?

I'm going into the weeds here , so I recognize it . But what you should be asking yourself right now in your head is okay , should I be prioritizing , keeping keeping my income low maybe $50,000 , to take advantage of a potential $300 total for my spouse and I ? Maybe , let's call it $3,600 a year for healthcare pretty cool or should we be going ?

Yes , I get that , it sounds cool . I like this idea . But maybe should I be considering doing Roth conversions , because if I'm strategic here , maybe that will put more money into my pocket , and that's the question that you guys should be asking yourself right now . Now I want to make sure you're crystal clear on this , guys .

So , really , what I just said is I'm telling my client and I did this in real life I say hey , client , I know you want to do this . You know why . I know that Because you're a human , you're not a robot . You like the idea of spending $300 a month instead of $2,000 a month . I get it .

Now I'm going to ask you to do a Roth conversion for $100,000 , which means now I'm shooting your income up like crazy and now you're spending a thousand fifty . Let's call it just for simplicity two thousand a month total between you and your spouse . Twenty four thousand a year .

You're like all right , I think you might be the worst financial advisor in history , because you told me before I could spend thirty six hundred and now you're telling me you want me to spend twenty thousand more dollars than I need to . I go yep , you're exactly right . They like why are you doing this ? I go well , look at this right here .

Here's the couple , okay , that we're talking about . They're 54 . If they retire and their income gets really low and we do conversions and fancy stuff which we'll talk about later it could and there's a lot of planning that goes into this , so don't read into the numbers too much it could yield them 1.4 million more dollars over the course of their lifetime .

So they're like okay , are you telling me that if I forego this benefit here and I'm not saying it all the time makes sense to do so Once again ?

Sometimes it does not make sense , but they're saying are you telling me I should intentionally give up a $20,000 federal benefit from the government for the next 13 years , until Medicare kits , where I would have saved $265,000 to do a Roth conversion to save me $1.3 million . Yep , that's exactly what I'm saying . And they're like .

And then I shared this with the client and they were like okay , I totally get it . They were educated well , they're on board . Another client came to me and they're like Ari , I'm just not a big spender . To me , roth conversions I just I don't know .

I kind of heard you talk about it but I got a little confused because there's just a lot to it and I just I don't know if it's gonna be really applicable to me . What should I do ? And in their case , I recommended that they did not do Roth conversions because it would have actually defeated the purpose .

Meaning Roth conversions would have , over the course of their lifetime , saved them maybe $150,000 , but doing this would save them $250,000 . And that's all you're asking yourself right now . You're going , hey , what's going to save me the most amount of money ?

I don't care if it's a conversion or a subsidy or whatever it is , I just need to make sure I don't pay more than I need to for healthcare . So what I encourage you to do and I know you guys have access to this tool in my academy . If you don't already know , you can see it right here .

Play around with all the healthcare , all the tax , all the stuff I'm doing with you guys right now is you get to go into your plan this is just a sample person and go into their plan and add in healthcare costs and add in all of these things , so you get to add expenses in here for home improvements and monthly spending and healthcare costs .

You can see here we just template pre-retirement healthcare at 6,000 a year . I just put that for a sample here . I said what if each spouse is spending six thousand ? So twelve thousand total ? Well , what you can see here . Let me reset this because I was doing some stuff for them earlier and I know a lot of you guys are like look , you're losing me here .

I'm on the podcast app . What's going on here for this episode ? Yes , I encourage you to go to youtube . You don't need to , but what I'm showing is right now here's a couple 52 and , like I showed you , they've got about a million dollars . They're on track for $26 million . Now , not really okay , because 26 million is not gonna be worth 26 million .

So , like , let's get our heads straight here . One million is gonna be worth 10 million , and they're on track . Okay , they thought about stopping work at 65 , but what if they stop working at 60 ? So , just hypothetical here . Well , if that was the case , they're going to have way less money , okay . So look at this , are they okay ? Yeah , they're okay .

There's $2 million of $10 million , but they're still okay . Healthcare is the big one , though . So what if we brought down healthcare costs from 6,000 a year each to 2000 a year each ? What does that do to the plan ?

And this is what you guys get to play around with , and I encourage you to do so , because watch this , oh my God , it's the equivalent of saving $2 million . Now they have 4.6 million , they optimize their healthcare , and they retired five years earlier than you thought . This is the power of financial planning , guys .

This is why this stuff is so awesome , where , if you're strategic with all your planning , you're not working longer than you think , you're saving hundreds of thousands , literally millions of dollars . This is the quality of why I love this stuff . So today's episode , I know a little bit more deep into the nuance of this , this tool .

Everything I'm showing go into the description , you can get access to all of this stuff . I hope this is super helpful for you guys and you get to start optimizing . That's all I got for you guys , if this was helpful . Once again , two ways to work with us .

I've got our academy tool no one-on-one guidance , but if you want to run all the projections , do everything we just kind of saw me go through you can do it in here . If you're like , no , I just need someone to help me with all this stuff , it's too much , I don't want to screw it now .

But number two is that's why we exist and I encourage you to apply and work with us . And if this was helpful , my only ask is you drop a comment , or you like this video or you share it with someone that you resonate with well , so that they can retire early with you and it's more fun . So that's all I got for you guys .

Thank you for listening to another episode of the early retirement show . If you have a question that you want answered in a future episode , you can always go to my website , earlyretirementpodcastcom . That's earlyretirementpodcastcom and you can go ahead and submit a question that I'll look to answer in a future episode . Thank you all for listening .

Please do rate it , review it and share it with someone who you think would benefit from this information . If there's anyone out there that you know , I certainly appreciate it and I will see you all each week . Hey guys , it's me again . Please be smart about this . Nothing in this podcast should be construed as financial , tax or legal advice .

Consult with your tax preparer or financial advisor before taking any action . No-transcript .