I’m not sure if there’s a better route. Lack of affordable insurance options is going to force a lot of people to work until they are old enough for medicare. You used to be able to buy very cheap plans with a high-deductible. That’s what most small business owners I know did before Obamacare. Those plans died, because they didn’t meet the requirements of being an Obamacare plan.
I buy from CA exchange. Being a business owner I can deduct healthcare costs. So I am paying with pre-tax dollars. Getting health insurance from work is not free. You just get paid less. There is no free lunch.
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True, but most people horrible underestimate the cost of all their benefits. It adds up if you went and tried to buy the same benefit package on your own. Too many people think if they replace their base pay, then they’ll have the same standard of living.
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Years ago, I got health insurance by joining a small business association. They had certain rules–you had to work I think 30 weeks, 30 hours a week–to be counted as self-employed? Not that they checked. But they had a group plan you could sign up with.
If you are a realtor, you can easily tell people you work 30 hours a week. Nobody knows how many hours you talk to potential clients and how many hours online to do research.
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So we have nailed health insurance choice. Seems that Covered California is where you buy health plan, we can forget about realtor associations since manch must have compared with state exchanges. Will the premium skyrocket again since the individual mandate is gone now?
Do you see anything that would make premiums decrease? At this point, slowing the increase down to the rate of inflation would be a significant achievement.
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If health insurance costs 24k a year, how can small business afford workers in Sacramento or Modesto?
If small business can’t afford the health insurance for employees, how can people afford health insurance? Median household income is only 60k in California.
Corporate insurance is much cheaper, probably 10k a year, but that could be due to the high percentage of young and healthy workers
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Obamacare subsidizes you if your income is low. Now that Trump got rid of the individual mandate premium will rise.
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The issue is high cost of housing. If one is free off mortgage. Perhaps $150K will lead to comfortable life. More than half still have a mortgage leading to a disastrous retirement. Some after living there for 40 years have their homes foreclosed. I got one now. Her medical bills surpassed insurance…
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How does the Obamacare subsidy work? Is the subsidy from the federal tax revenue? Or is the regular buyer subsidizing the low income buyer?
I think a healthcare reform is needed. Hope they can work out a decent solution to gradually reduce the healthcare cost to reasonable level. (Probably a tiered system. Low cost Medicaid; higher cost Medicare; private insurance for best coverage. Lower than median income, go to Medicaid. Everyone can qualify for Medicare with self paid premium so that younger people can make the average cost lower for Medicare. If only old people in Medicare, it’s cost would be high)
But you can still buy a plan with a higher deductible in exchange for a lower premiums. Most poeple don’t reach the deductible amount.
Thus the rise of part-time and gig employment. Big employers can negotiate better pricing by buying thousands of policies. Small companies can’t get the same pricing, and it makes it more expensive for them to compete against big employers.
People complain about smaller raises. A big portion of that is due to higher healthcare premiums.
The only real solution that lowers spending is getting people to be healthier.
Medicaid is only cheap, because the payment rates are horrible. Most doctor offices would go out of business if they only had Medicaid patients. So we pay taxes to cover people on Medicaid, and we pay higher premiums so insurers can have better reimbursement rates to offset low Medicaid ones.
The exchange subsidies are from taxes. It’s income redistribution.
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This is where I plug the ownership of rental property, especially multi unit properties. Hopefully by the time you are near/at retirement they would be paid off or flowing so much cash that you wouldn’t have to really worry too much about the cost of health insurance. Food for thought…
It all depends on your housing situation. Someone with zero mortgage and 1K in prop tax is in a different place than someone with 8K a month in mortgage and 40K in prop tax.
Perhaps remove mortgage/prop-tax from the equation. I would think 100K is enough to cover the additional costs (healthcare, food, home upkeep, etc).
Why would you FIRE in the Bay Area anyway? Seems like the worst possible place for early retirement.
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True. It makes more sense to go to a state without income tax and lower property taxes. The amount of income required would be much smaller. Also, you’d have more cash left after buying a home.
Bay Area is not cheap, but I think it’s actually a nice place to FIRE for forum members. Most forum members would achieve FIRE through rentals, mostly in Bay Area, and stocks. Bay Area is a good and safe place to retire. Property value and rent increase would be more dependable. The only expensive stuff in BA is housing, which would be a non-issue after the purchase.
Staying in BA will give you a better confidence that your passive income will keep pace with the standard of living. Basically all the young talents from the whole world come here to rent from you and their success would be shared by the landlord in the form of rent increases.
Another benefit is the good job market here which serves as a safety net for you. You can go back to work as an engineer or consultant when you are bored or when there’s unexpected financial burden. It would be too little options if you retired to a remote place. Say you retire to Hawaii, what do you do if you suddenly need a job?
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I guess I don’t think of managing a bunch of rentals as FIRE. Sounds like work to me.
Regarding “keep pace with the standard of living” – the key here is to ensure that your principle continues to grow at/above inflation. You don’t have to be in the Bay Area for that to happen.
I don’t see the safety net argument. If you’ve been sitting on your butt for 10 years watching tv, you’re going to have a hard time getting your foot back in the door. It is a one-way trip.
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Realtors are independent contractors…They don’t get employer healthcare
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At least for me, it’s really hard to turn my brain off, and i keep exercising my skills that i also happen to use at work.
Many people are like that.
By moving to Tahoe my cost of living went to zero…In fact I make more here and everything costs less…rentals with no mortgage with 6-10% cash flow…Hard to get cash flow in the BA…that is why it is good to diversify with some properties outside the BA
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