Are You Getting a Value-for-Money Retirement?

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Posted by The Savvy Retiree on November 9, 2020 in Save Money

Another week. Another doctor. 

I’ve been having strange, knife-like pains in a back corner of my tongue that no one can figure out—dentists, oral surgeons, a maxillofacial specialist, and two ENTs. I just returned from a neurologist prior to sitting down to write this. Healthy as a horse…and yet, knife pain every day.

I mention all of this simply to establish my bona fides for writing about healthcare outside the U.S. See, I came across a recent story in Forbes from a healthcare analyst noting that “Per capita, the U.S. spends more on healthcare than any other [Western] nation… But, the U.S. gets a comparatively meager return on its investment of healthcare resources.”

Maybe I should just show you the graphic he posted. It says so much more than the words:

When I saw that chart…well, I mean, it’s just visually shocking. To see how poorly American healthcare ranks as scored by life expectancy—and a life expectancy that’s in decline—relative to healthcare expenditures. The U.S. overspends and, sadly, under-delivers.

I share this not to disparage the U.S. And I know other stats speak better of the U.S. healthcare system. Instead, this is more of a wake-up call for those of us approaching retirement or those already in retirement. It’s this idea of “value for money”—a concept I write about all the time and which is relevant to personal calculations whether you’re a retiree looking to trim living expenses, or a remote-working digital nomad like me looking for a way to reduce your outlay in order to increase your savings or to enhance your lifestyle…or both.

In the broadest sense, then, this column is about where your dollars go further relative to housing, food, and just overall cost of living. As I’ve written in previous columns, I see this in very real terms in my day-to-day living here in Prague. I know how much more affordable my life is here, even though my income is actually less than what I was earning stateside.

But I’m focusing specifically on healthcare—high-quality care—because it’s a critical consideration in everyone’s retirement calculus and a fundamental pillar required for a fulfilling, enjoyable retirement.

It’s not that healthcare in the U.S. is not of high quality. Of course it is. It’s that the medical outcomes are subpar relative to exceedingly high costs, and that those costs wildly surpass those in other countries—countries where life expectancy is greater and medical outcomes are superior.

Americans, on a per capita basis, spend $5,032 in personal dollars on healthcare as of 2016 (the latest data), according to statistical site Statista. Those personal dollars Americans spend are on top of the nearly $4,900 public dollars spent on healthcare. 

The next closest country is Switzerland, a very high-cost place to call home, where the Swiss spend less than $2,900 personal dollars per year on healthcare.

If U.S. healthcare outcomes led the world—if Americans generally lived longer than people from elsewhere in the world—then maybe there’s an argument that those high costs have a benefit. 

But when Americans trail the Western world in life expectancy, and when outcomes are statistically worse than throughout the West, well, then, you have to ask: What benefit do those sharply higher costs really afford me?

I think about the question regularly when I contemplate the idea of possibly returning to the U.S. one day, or seeking residency in the Czech Republic (and probably Uruguay, a country I adore).

The Social Security Administration says my monthly income will be somewhere in the range of $2,700 to $3,400, depending on the age at which I claim my first check. I also know the minimum nest egg I expect to have, based on highly conservative estimates (essentially, my nest egg today and assuming zero growth). From all of that, I have a good idea of how much money I will have to live on later in life.

Thus, I know I could probably afford healthcare costs if I moved back to the U.S….but based on those costs, and healthcare inflation in the U.S., I know an American retirement budget would leave me with a standard of living well below—and I mean well below—what I’ll be able to afford in much of Europe or in Uruguay. (And I say “much of Europe” because after living in Prague for five years, I’ll be eligible for a Czech passport, which is an EU passport, which means I’ll be able to move around and live in places like Portugal, Spain, Ireland, and Greece.)

That’s why a story like the Forbes piece stands apart. It’s telling you that there are better options to consider—options where your cost of medical care is cheaper and your life expectancy is longer (implying better medical outcomes). Combine those two, and, well, you’re talking about a healthier life and, ultimately, a happier, less-stressful lifestyle.

By Jeff D. Opdyke

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