Save for Medical Expenses – A Better Gift than an Inheritance


Often on this blog I speak about saving and investing to gain financial independence.  This is a magical state at which one can choose to continue working, stop working, or go off and do something entirely different because the return from one’s investments provides as much income as one’s job.  There is a profound sense of freedom in being able to work for enjoyment rather than for money.  There are, however, other reasons to save and invest.

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I’ve always been amazed at how many individuals would never take charity or welfare unless they could absolutely not avoid it, but feel no obligation to pay any of their medical expenses, especially those in retirement years.  Now before I get a lot of angry comments, I realize that those working are charged taxes for Medicare (US readers only, outside of the US many are charged even more of their incomes for medical care), so taking Medicare benefits is not really the same as going on welfare.  Still, comparing the amount that is paid into Medicare with the expenses many expect to be covered — virtually unlimited expenses no matter the years of life added or chances of success — it is clear that many expect far more out than what they’ve paid in.  I remember the story of one lady who was told by her financial advisors that she should spend her entire IRA account — an account of more than $100,000 — so that she could be put into a nursing home on Medicare.  While nursing homes do cost $60,000-$80,000 per year, I could not understand why she could not at least pay for the first year-and-a-half or so before relying on the taxpayers to cover the rest.

Many people save a little for retirement and almost nothing for medical expenses, despite medical expenses becoming an ever-increasing cost in retirement years with advanced procedures and medications lengthening lifespans but at a high cost.  Most know that they will need money to cover expenses, but instead fill their lives with toys.  They figure that they’ll get through somehow when the time comes.

Unfortunately, the ones who will probably get stuck with a lot of the bills may be your children.  It is true that they might just let you get whatever level of care you get with Medicare (or whatever kind of care there is 30 years after Obamacare has fully taken hold).  They may, however, decide to pay out of their pockets to get better care for you than that the government provides.  This will require substantial amounts from their savings to provide your care at a time when they should be saving for their own retirements and childrens’ educations.  If you don’t really love your children, this may be the path to take.

If you care for your children, however, save up enough money so that they can pay for you to have home health care, a better nursing home, and better care without strapping themselves financially.  Being truly responsible means taking care of oneself first so as to not be a burden on others, even before taking care of others.  On the flip side of the coin, this also means that you’ll have the financial resources to have a choice in the type of care you receive, even if your children are not able (or willing) to pay for better care for you out of their pockets.

Personally, I would rather see my parents pay the undertaker with the last dollar than get an inheritance.  They have given me the set of morals, a good education, and a great deal of love and support such that I can take care of myself.  They have therefore given me an inheritance already.  By saving adequately, however, they have also given me peace of mind in knowing that I will be able to get them the care I’d like for them to receive when they need it.  This is by far a greater gift.

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Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

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