Early retirement and health insurance – how to manage?

piggybank and stethoscope

If you haven’t got your health, you haven’t got anything.

Count Rugen, The Princess Bride

Introduction

How do you deal with health insurance in early retirement? Volumes have been written on this topic and for sure, I’m not an expert. But not much hits much closer to home than ensuring you have ready access to the healthcare you and your family needs, right? Good healthcare coverage is also pricey, being high up on the list of expenses for early retirees in the United States. Given that most Americans under 65 get their healthcare insurance via their employer, it makes sense that this is a top concern. The key question here is what to do for health insurance prior to Medicare eligibility. There are a number of options available and this is something I started investigating a few years prior to my leaving the workplace. I can’t cover the huge breadth of this large topic here, but I’m hopeful that this post will serve as a useful introduction.

Continuing your workplace insurance via COBRA

The Consolidated Omnibus Budget Reconciliation Act of 1985 or COBRA is a law passed by Congress which among other things, mandated an insurance program. This program provides many employees the option to continue their existing employee-sponsored healthcare coverage for a period of time after leaving their job. Barring those working at very small companies*, this is typically an option that is available to you. For those eligible for it, COBRA typically provides for 18 months of continuing benefits, paid by you. The cost is generally the same as the total cost to the company (their share plus yours) and a small administrative fee. A benefit of this approach is that you can stay on a plan you like, with the providers and insurance company you already know – one fewer change among all the uncertainty of retirement!

This is obviously not a permanent option, but is one that many, including my family have initially selected. After investigating my other options (more below), I determined that my monthly COBRA premiums would be similar to plans with a similar level of coverage offered on the CA state exchange. However, the deductibles for the latter were a bit higher. This made the choice to elect COBRA an easy one for now. Besides, I could always change course in 2021 if desired once the enrollment period comes around. One tip: ensure you know the logistics of your company’s program and don’t miss the filing deadlines! A few quick calls to the Benefits department put my mind at ease and ensured our policy didn’t lapse. I highly recommend you do the same in your own situation.

*Some states like California have an additional program to provide coverage similar to COBRA for those in these small companies (those with 2-19 people in CA).

Private health insurance

This is the option with which many self-employed people or those at small companies are already very familiar. In other words, signing up for healthcare insurance on your own with providers. I did some comparison shopping on a variety of websites but didn’t elect to talk with any brokers. My research suggested that premiums were higher for the level of coverage I’d be seeking for my family, so I didn’t spend any more time on this option. But particularly for those willing to run a lot leaner on coverage – as many younger people do, this can be a good option to ensure you have “something” in place. Consider talking with a broker as there are quite a few options available and someone knowledgable can save you a lot of time in the end.

ACA / “Obamacare” / Public healthcare exchanges

Among other benefits, the 2010 Affordable Care Act aimed to provide affordable healthcare insurance to more people. One aspect of the ACA that is attractive to many early retirees, particularly those following a leanFIRE approach, is the opportunity for insurance subsidies depending on your income level.

The number and quality of options available to you varies based on your state of residence according to my research. In many areas (like mine), this is a great choice to consider as many plans are available with sufficient providers to cover the need. I knew that California’s exchange was regarded as good but had to establish that for myself as part of our decision making process regarding where to live. As I mentioned above, the monthly premiums for the level of coverage I wanted to maintain were similar to COBRA. Unless there are substantial changes to what comes out of the ever-active discussion in the federal government in the future, this is likely our next step prior to Medicare eligibility. From a good news perspective, California has stated their commitment to providing healthcare and so I’m reasonably confident there won’t be a downturn irrespective of federal changes that could potentially come. Here’s to optimism!

Health care sharing ministries & other shared plans

These types of plans come up often in blogs and YouTube videos by those in the FIRE movement. They are attractive due to the much lower “premiums” vs. a true insurance plan. Important to state is that these plans are not insurance. In essence, these programs facilitate voluntary sharing among subscribing members for eligible medical expenses. Members send in monthly shares (analogous to premiums) which are distributed to other members to defray medical expenses following program guidelines. These terms differ quite a bit between the 100+ plans that are out there, so I recommend you investigate them thoroughly if this is of interest to you.

My family is not religious so those types of affiliated plans were not applicable. But there are some secular plans as well, that are otherwise similar in nature. I investigated these but I wasn’t comfortable with the lack of certainty of coverage under these programs. My family is fortunate to be in good health, but both my wife and I have had surgeries in recent years and these things do happen – more so as we age! I’d rather pay higher monthly premiums and know that my healthcare will be managed in the way to which I am accustomed. I didn’t work hard to get to this place only to risk a huge hit to our funds due to inadequate coverage. On that point, you will find articles expressing concern about this approach, given the lack of regulation, no requirement to cover pre-existing conditions, among other reasons. But clearly many are participating in them and like the service they have received. This may be a good option for you but please consider the pros and cons!

It’s not only about premiums – other budget concerns

Most of this post has been about insurance premiums – the “known” part of your healthcare costs. But there is of course more to it! You need to ensure that you contemplate your deductibles, co-insurance costs, and any other out-of-pocket expenses that you might incur. Your budget must account for these potential expenses unless you like gambling a lot more than I do. For me, in addition to my six-month emergency fund, I make a monthly budget allocation into a sinking fund for routine medical expenses. I was “fortunate” to have surgery early in 2020 so that I already hit my out-of-pocket maximum by the day I left the workplace in June. This means my only in-network healthcare expenses will be for monthly premiums through end of the year. As a result, I’ll start 2021 with some buffer in my sinking fund to pay any healthcare costs prior to meeting my deductible and co-insurance limits next year.

Your health is not guaranteed and what your costs are one year will not necessarily tell you what another year will look like. All models (financial or otherwise) are wrong, of course! But looking back at your healthcare expenses over several years is a great way to work out how much you should plan to spend outside of your premiums. I strongly recommend you err on the high side when estimating what your healthcare expenses will be in retirement to ensure you have adequate resources available.

Looking into the crystal ball…

It’s hard to think of a more dynamic topic in Congress and elsewhere in the US government than healthcare. I don’t have any more clarity on where things will go than any of us, of course. I am pleased by the bright light that has been aimed at this topic in recent years, as like many, I believe it is much needed. But what will come of that attention remains to be seen. Should we see an administration change in the upcoming election, perhaps ACA will be replaced by something more attractive. On the other hand, if ACA is repealed or we otherwise have a downturn in the federal offerings, I feel pretty good that I’ll be OK in California. I’d be lying if I didn’t say that healthcare remains a topic of concern to me, but it isn’t keeping me up at night. There are good options available in the US (and elsewhere – a topic for another time), and we have budgeted for a variety of scenarios.

Cheers to each of you and to your good health!

photo credit: “Health Insurance” by 401(K) 2013 is licensed under CC BY-SA 2.0

Advance by working smarter, not merely harder

sign: work smarter, with "harder" crossed out

This post is part four in a series about factors I have found best enable success in the workplace. Click here to see the others in the series.

Hard work is the difference between dreaming and achieving.

-Anonymous

Introduction

“Work hard” seems rather simple by comparison to the other four keys to success in the workplace: never stop learning, align yourself with great mentorsembrace change, and leverage your strengths. However, there is much more to this element than meets the eye! My conversations over the years have led me to conclude that many people believe that simply working hard is sufficient to gain recognition and to get ahead in the workplace – not so, as many of us have found! Yes, it is vital to be a hard worker. But it’s also essential to make sure you get as much leverage from that hard work as possible, so that it leads to career advancement and personal growth. There are a lot of things that fit with this important concept, and I will focus on three broad areas in this post.

Work hard in the right roles, for the right people, and for the right reasons

Most people will readily identify that working hard to achieve and exceed your stated goals is an important element of getting ahead in the workplace. A related point is that you must also work with those who will value your efforts and take your achievements into consideration when it comes to identifying future opportunities for you. This post isn’t one about the power of aligning yourself with great mentors, but this concept warrants mentioning again here. If your boss or your company culture doesn’t value the hours you put in, your many successes, and recognize you accordingly, it’s time to change that situation! Never stay in a job that fails this basic requirement.

I’ve written about the value of continuous learning and embracing change as growth drivers, and these are indeed vital. However, it is also essential not to only look ahead to your next opportunity, treating your present role as merely a stepping stone. Ensuring that you work to gain the skills and knowledge needed to succeed in your current job will result in a strong foundation to build upon for the next challenges to come. In my experience, at least two years experience in a given role is a good starting point. Be sure to go beyond merely “putting in your hours”, and make sure you learn and grow as much as you can while in each role – something I’ll cover in the next section.

On a related point, make certain that you aren’t chasing titles as your primary motivation versus choosing roles that truly advance your abilities, leverage your strengths, responsibility level, etc. Unfortunately, this is a trap into which many people fall. I once very nearly turned down what ended up being an amazing career opportunity solely because “I felt” it should be a Director role vs. the Senior Manager role I was offered. In the end I took the role with a compromise solution of “Associate Director” and about a year later I was promoted to Director. In hindsight I can’t imagine missing out on such a great opportunity over something as insignificant as a title! Equally bad if not worse is the time I was strongly considering taking a C-level role at a small company even though I could tell that the place was a train wreck, was not very interesting technology, and would otherwise not advance my career. That title (and compensation) was just so darned attractive! Thankfully I wisely moved on to other opportunities, ones that truly leveraged my strengths, and accelerated my path to financial independence and early retirement. I’ve seen far too many people take jobs that do not advance their career progression nor their abilities, simply because they thought a given title was important unto itself.

Constantly seek opportunities for growth

I’ve already written about the value of continuous growth and learning. One way to ensure you are working smartly and not only hard, is to take deliberate steps to make certain that this growth happens for you. Yes, great mentors will help you in these pursuits. But even then you are not relieved of the responsibility to be your own best advocate. There are many ways to do this. Put your hand up when special projects come around that are of interest to you, even if this may mean “more work”. Seek opportunities where you can work across teams or with other company sites. It’s amazing how much you can learn simply by getting out of your typical work environment. This will also demonstrate your willingness to learn new things and to grow to those around you.

I have always appreciated team members who put in the required hours (and more). All good managers value hard work. However, I appreciated it even more when employees independently sought opportunities to drive improvement. Some of my most successful team members have shared the same attribute: when they see something that can be made better, they don’t simply raise it to their manager’s attention. They also came with a proposal for how to improve it, whether or not it would benefit them personally. Managers may not always agree with such ideas, or the timing may not be right to take action, but I can think of many times where I approved these kinds of projects. These can provide great learning opportunities for you, as well as to demonstrate your capabilities to your manager and others with whom you work. Be known as a problem solver and one who understands everything can be improved! This only helps build a strong network who will aid you on your journey, which is the topic of the next section.

Gain massive leverage from your network

If there is one lesson I took from biotech, it is that it is a small world. Despite the many thousands of people working at so many companies around the world, “everyone knows everyone”. Most industries are like this, particularly once you work at a certain level of responsibility. You simply can’t have a conversation with someone else in your industry without realizing how many contacts you share. Why is this important? It is shocking to me how many times that simply knowing someone at a given company has opened a door to me. Getting noticed is half the challenge when it comes to finding great jobs, right? Leveraging your network is a sure-fire way to ensure you aren’t lost in the noise. Having a large network also can help you find great candidates for roles on your team. So I assert that you should always be building your network. How?

No one starts with a huge network when they enter the workplace. It must be grown from the ground up and nurtured along the way. There are likely many ways to do this. My primary recommendation to you is simple: be someone with whom people want to work! Be that coworker who is regarded as reliable, who always puts in the effort needed, and is a pleasure to work with – someone people will seek out when they need help. While this isn’t difficult, many people seem to struggle with this. I’m sure you’ve known coworkers who were technically competent but who had some attribute that made you avoid them – maybe they were a bully, a know-it-all, or one never willing to compromise. These people may find a way to advance but it is far less assured and may take a lot longer. Rather, you must act in ways that make people remember you for positive reasons – it’s that easy. I once worked with a rather prickly programmer. I got along with him pretty well despite his grumpiness, and had taken the time to figure out how we could best work together. As a result when I needed help he was generally very willing to support me. One day he pulled me aside and said “You know, Jason, I figured out what really bugs me about you: you’re probably the most liked person at this company! Not the most likable, mind you (ha!). But you’re easy to work with and get along with everyone – and that really annoys me.” Do you need to be friends with everyone at work? Of course not – that’s impossible. Just carry yourself in the right ways, be gracious while being your genuine self, and I assure you that people will respond well.

Another simple thing is that you need to put yourself out there and actively build your network. Make sure you introduce yourself to colleagues at your company, key vendors, and customers. Seek opportunities to attend conferences and meetings where appropriate, and get the most out of those events. Attend the cocktail hours, dinners, and workshops and try to make good contacts at each. You aren’t there solely for fun, right? Will every conversation be a great one? Of course not. But I’m surprised by how many people I have met at these events who have turned out to benefit my career at some future date. Of course you have to keep up relationships to stay top of mind. These days, tools like LinkedIn, industry forums, and others make this much simpler. If you worked with great colleagues in a previous company, make sure you reach out to them periodically to find out how they are doing. I landed one of my best jobs simply by asking someone with whom I used to work out to lunch. Not only did that role give me great startup experience, I met my future wife at that company!

There is a flip side to all of the positive things I mentioned regarding network building. You must also remember that your reputation follows you. If you are someone regarded as difficult to work with, a slacker, or otherwise with challenges, your network will freely share that information. People talk, and when it comes to considering candidates for jobs, they will unbeknownst to you, use their own networks to vet the fit of someone for a role. Make sure that conversation can only go in a positive direction!

Conclusion

Working hard at any job is stable stakes – you’ve simply got to do it. I’m sure that’s not a surprise to anyone! But there are some relative straightforward things that I recommend that will allow you to work much more smartly as well. The leverage you will gain from that can accelerate your success in the workplace. What “working smart” tips have you found to work for you?

photo credit: “Work Smarter” by JuditK is licensed under CC BY-ND 2.0

Reflecting on the first three months of retirement

September 5th calendar

To see all of my milestone posts to date, please select this link.

Today marks three months since I left my job and career in biotech behind. I find it useful to reflect on milestones and this feels like the first “big one” for me relating to my retirement. As I’ve written about before, I spent the first month preparing for and carrying out our family’s move to a new home in a new town. My second month was largely consumed with unpacking, organizing, and carrying out improvement projects around the house. That means that the third month was the first true test of what this next phase in my life is really like. I wrote a milestone post after six weeks, but I feel so much more prepared to review what this has felt like so far at the three month mark.

Keeping busy has proven to be easy

From a practical perspective, many things have been as I thought they’d be. I created space to focus on hobbies and interests, such as cooking. I have also devoted time to learning new things, including WordPress for this blog and improving my iOS app coding skills. We recently got our beer brewing area set up and my wife and I have the first couple of batches in our new home under our belts as well. I’m also pleased that I’ve stuck to getting outside more and exercising, with my morning walk being something to which I truly look forward each day. The latter has also helped me achieve my retirement goal of getting back to reading a lot of books, as I’ve learned just how many audiobooks are freely available on Spotify. In case you’re interested, The Count of Monte Cristo (free audiobook; paperback) has been by far my favorite to date! Given this list of what I’ve been doing, I feel really fulfilled and generally think that I have been spending my time productively.

Continuing on the theme of “doing things”, it’s also been nice to start exploring our town and broader area with my wife and daughter. Of course there are some limitations to that pursuit due to COVID-19 – not something that was in my retirement plan, of course. Given the unseasonably hot weather we’ve had on the Central Coast, that has largely taken the form of visiting the beaches and hiking trails about 30 minutes away, on the much cooler Pacific coast. My wife and I have also enjoyed visiting a number of area wineries and breweries (yes, there is a budget line item for this!) that have appropriate outdoor seating. We don’t yet feel like we know our new town well, but are optimistic that 2021 will provide us fuller opportunities to do so once we have the worst of this pandemic behind us.

What has retirement felt like so far?

Focusing more personally, there have admittedly been surprises in how this “feels”. How can you know what it is like to leave the only career you’ve known until you do it? The short answer for me, anyhow – you can’t. First and foremost, I have felt very positive and motivated the overwhelming majority of the time. I’m very happy that I haven’t found myself dwelling on whether retirement at this time was the right decision – which would be pretty scary. We spent ample time making the decision of when I could retire, and several years preparing for it. I’m certain that helped. That said, sometimes I find myself dwelling on questions like:

“Am I really being productive with my new-found free time?”

“What comes next: Start a small business? Buy one? Pick up a fun part-time pursuit?”

“Do I take a bold step into something new or test the waters first on several things?”

These aren’t bad questions of course! But I have to take care not to allow what should be exciting brainstorming opportunities to devolve into concern or stress over not knowing what to do next. Admittedly I am seemingly prone to this if I’m not careful. Believe me – I know how fortunate I am to be in this position. I’m not looking this gift horse in the mouth! But in all honesty, retirement is a huge change and one that shouldn’t be underestimated. I expect everyone goes through these thoughts at times, irrespective of how prepared they are for retirement or when they do it. I suspect this is a good time to get back to mindfulness practices, like meditation, which can surely only help.

Retirement impacts the whole family!

It’s important to acknowledge that retiring results in changes for everyone in the household. In my case I think this has been overwhelmingly positive – but admittedly I think we should talk about it more as a family. I’m happy that I’m now able to help more with daily chores, be a better partner with my wife in helping our daughter with school, and just be present that much more often. I know I missed an awful lot given the time commitments of my former career – including a lot of international travel. I’m very happy that those tradeoffs are no longer part of what we need to manage as a family.

Above all, I am incredibly thankful for the endless support that I get from my amazing wife, Lorri. She is incredibly patient with me even when I’m feeling overwhelmed about questions like those above, which can lead me to be grumpy at times. In addition, she is always quick (and correct!) to remind me that there is no time pressure to decide on “what comes next”. I have the freedom to spend my time as I wish! I have also realized that I need to be more open about what I’m feeling and work through it as a team. We are so fortunate to be in this situation together and these three months have taught me I am prone to keep much of this to myself – I’m working on that. I can’t imagine going through this journey alone and I am so grateful that I have such a great family on this wild ride with me!

On to the next three months!

I can’t believe how quickly these last three months have flown by. The first two months in particular went very fast given our move and time spent getting our home in order. That said, I am happy with what I’ve accomplished so far and feel fulfilled by how I’ve spent my time. While it hasn’t always been smooth sailing from an emotional perspective, I know I made the right move and am excited by the seemingly endless possibilities of whatever I choose to do next. Yes, there are still important decisions to be taken but I remain ever grateful that I have this opportunity to do so. I wonder how this post will read to me a year from now, with that much more experience. Here’s to all that is yet to come!

photo credit:
“Friday, One more day to go DSCF3565” by tomylees is licensed under CC BY-NC-SA 2.0