If You Are A Baby Boomer, You WillGo Bankrupt—If You Stay In America
Recently (drum roll, please) I had a tooth removed (cymbal crash!).
|Unlike us, he’s got no worries—
he can afford a good gerontologist.
But I live in Chile. So I wound up paying $62 for the extraction of a cracked rear molar, and an additional $450 for a state-of-the-art implant with a porcelain crown that ought to last me the rest of my life. This was done at a fancy-pants private dental clinic, with the latest equipment and some very hot nurses, lemme tell ya. I practically looked forward to going! (Don’t tell my wife. Please.)
Meanwhile, a friend in Texas, with nearly the identical problem, wound up paying $2,000 for the implant, and an additional $1,500 for the crown—almost 8 times what I paid. I told her it would have been cheaper—substantially cheaper—for her to fly down to Chile, stay at a nice hotel, and get the procedure done here. She thought I was kidding—until she compared the costs of the procedure, added the airfare and hotel costs, and then realized that I was right. (If you don’t believe me, check out the American Airlines website and the Holiday Inn website for yourself, then do the math.)
Another example: My 89 year-old grandmother has senile dementia, so she requires round-the-clock nursing care. Her cost? Here in Chile it’s about $1,500 per month—and this is private nursing care through a professional agency, with fully acredited RN’s taking care of her day and night in her own home. In the U.S.? The cost for the same quality of care would be between 5 and 10 times as expensive, if not more.
Now, I’m not bringing up these examples because I’m working for the Chilean ministry for tourism—I’m not. I’m giving these examples in order to highlight something crucial about globalization.
Globalization has meant that labor costs are much cheaper outside the developed world. A factory in China will produce a doodad at a small fraction of what it would cost to produce in America or Europe. Which is great, if you want to buy that doodad.
But globalization has also meant that the care and services required for older people are much cheaper outside the developed world—and prohibitively expensive in the U.S. and Europe.
Which is a disaster for retirees in America. Because if you are a retiree—or if you are a Baby Boomer who will soon be retiring—then you live on a fixed income: Be it a pension or Social Securitychecks or an annuity or some combination thereof. So if you live on a fixed income, and the price of health care (or health insurance) is continuously rising, then it is a certainty that you will go bankrupt before you die.
Pretty much sucks, yeah? Here’s why.
America is a demographic timebomb. According to the Population Reference Bureau, there are 72 million Baby Boomers alive in the United States today. That is, the 76 million that were born between 1946 and 1964, minus the approximately four million members of this generation who have so far died. As of this year, 2013, those 72 million people are aged between 67 and 49—and they represent almost a quarter of the total U.S. population.
Baby Boomers have begun to retire—and they are already having powerful effects on Social Security. As of 2011, the ratio of retirees to workers was 35 per 100. By 2030—when Baby Boomers will be between the ages of 84 and 66—the ratio will be 49 per 100. Social Security will be unsustainable—retirees will be receiving fewer benefits (i.e., less money) as more and more Boomers retire and demand their SS checks, while fewer and fewer workers contribute to Social Security.
(And by the by: The is no such thing as the “Social Security Trust Fund” or the “Social Security Lockbox” or any other such balderdash. Social Security is essentially a pyramid scheme, whereby new participants pay for the older participants. And as everyone knows, a pyramid scheme works great so long as there are ever more people joining the pyramid and contributing. But once the demographic base narrows—as it did following the Baby Boomers in 1964—there are fewer people left to pay the older players. Which is what’s happening to Social Security. Which is why Boomers will get far less than their elders, and far less than what they actually contributed over the years.)
On the other hand, the effects of aging and retiring Baby Boomers on health care costs are already catastrophic—and they will get much, much worse as the generation ages. An older population means more sick people. More sick people means more demand on health care resources, which of course drives up costs. And we are seeing this in the aggregate health care costs in the United States: Those costs rose “only” 4% in 2012 after adjustment for inflation. The year before, they rose 6.7%. Next year (2014), many experts predict costs will rise by nearly 7%. These numbers will only get worse as the 72 millions Boomers go through the aging process all at the same time.
So, rock? Meet hard place: Baby Boomers will receive less government retirement money, even as health care costs will rise, as ever-increasing numbers of Baby Boomers make more and more demands on the American health care system as they grow older and sicker.
This situation of less retirement money and higher health care costs is inevitable. It is a function of demographic reality: Too many Baby Boomers who will get sick, and not enough working, taxpaying Americans to pay for their care.
Which leads to the following, inevitable conclusion: Every Baby Boomer who gets seriously ill after retirement—but does not die—will likely go bankrupt.Every single one.
You know those horror stories about retirees who lost their businesses over a bout of appendecitis, or lost their homes because of a routine colonoscopy? A few years ago, those stories were reserved for an article in USA Today: A modern-day tragedy, my oh my. But now, these stories are happening to people we know. In some cases, they are happening to people we love. And in some cases—ever increasing number of cases—these stories are happening to us.
You have to be realistic about the situation. It doesn’t help to loudly claim that “American health care is the best in the world!”, and then stick your head in the sand until you’ve lost your home and all your money because of the spiraling costs of health care in America. And as to why this situation is as it is, the answer is academic. There is more than enough blame to go around, so assigning it is relatively pointless.
What matters is what to do about this situation. How to dodge the bullet, and get the health care you want without going bankrupt. You have to look at the situation, and figure out what’s right for you.
This is what I think:
If you are a retiree, or close to retirement, it is insane to continueliving in the United States. You will go bankrupt if you do.
Therefore, take advantage of globalization: Leave the United States, and go to where medical care is cheaper.
Going back to the example of my friend in Texas: She paid over $3,500 for a tooth, while I paid less than 13% of that cost. In other words, I got an 87% discount—because I was not living in America, and so did not have to pay the outrageous prices of American health care.
If you could get an 87% discount on your health care, would you take it? Or would you deliberately stand pat, pay 100%—and go broke?
The answer is obvious. So if you cannot afford health care in the United States—or realize that, in the not-too-distant future, you won’t be able to afford it—then the smart move if you are living on a fixed income (or will be soon) is to try to look for a place where health care costs are manageable. A place where you can receive your pension or Social Security check or annuity or whatever, and yet not be afraid that you are one medical emergency away from losing your house and all your money. A place where you can take advantage of globalization, and get the best medical care at the best price.
At my Strategic Planning Group, I have a Scenario called “Exit America”. In it, I discuss how to leave America (or Europe), and find a new place that’s right for you. I do not claim that there is some Eden out there where everyone can just go and be happy—there is no one-size-fits-all Shangri La. That’s because everyone is different, and so different people have different priorities—different things and situations and environments that make them happy. Which in turn means that “Eden” is different and unique for each one of us.
Therefore, in the Scenario, I outline a strategy to find a country that’s right for you. I explain how to figure out your priorities, then start looking for a place that satisfies those priorities, while at the same time giving you practical knowledge and insights into how to exit America.
When I started the Scenario, I had in mind people who wanted to leave America because of political or philosophical reasons, as I did. In my own case, I had become dismayed by the police-state mentality that has creapt into American life following 9/11, which finally made me want to leave.
But now, it’s becoming increasingly clear that one of the main reasons to leave the United States is because of the economics of retirement.
The flood of retirees that will hit America will make life unaffordable for people over 60 in the near-term future. Therefore, unless you are insanely rich, it is inevitable that you and the vast majority of your Baby Boomer peers will go broke because of health care costs, as I explained above.
So if you are a Baby Boomer, the smartest thing you could do is leave the United States now, while you’re still healthy enough to do so, and move to a country where quality health care is affordable. A country where your fixed retirement income will be enough to pay for good medical care without bankrupting you. In short, anyplace but America.
A final thought.
Have you ever seen a bankrupt elderly person? Have you ever met someone who is over 70, who cannot get any kind of a job, and who cannot start any kind of business? Have you ever met an older person who has no home, who has no assets, who has no income save for a small government check? They might get a few hundred dollars from the government every month—but will it cover their basic, necessary expenses? Will it be enough for shelter, for food, for medical care?
Now ask yourself: Do you want to be that person? Do you want to be making the choice between eating and taking your necessary medication? Do you want to be a person who scrambles to exist, but does not live? Because you will become that person, if you plan on retiring on a fixed income in America. One serious but non-fatal illness will break you, and leave you with nothing when you are at your weakest—guaranteed.
This is the inevitable outcome of the U.S. healthcare situation. Denying it is foolish, and trying to assign blame is a waste of time. The demographic reality cannot be denied. So if you are a Baby Boomer, and you do not want to be homeless and broke in your retirement years, your best shot is to exit America now—while you still can.
If you are interested in exploring strategies to leave America and find a country that’s right for you, go to my Strategic Planning Group’s Preview Page and check out the site.