Insurance Is Valuable Even When You Forget You Have It

For at least 35 years I have argued seniors are not so affected by inflation as they claim. The CPI does not reflect senior’s spending perfectly and they often benefit from the difference. While that may be true there are other factors that affect consumption. Among them the cost of medical care.

Seniors are not all so immune to that.

As always, we take context without full consideration. In Canada we have a medicare system that provides value even though we take it for granted. It is a form of insurance but since it is paid for with our tax expenditure, we don’t think of it that way.

An Insight.

Joachim Klement to the rescue. Last month he wrote a piece about an interesting difference that shows what happens without the government medicare program.

A chart that haunts me

You will notice on the UK blue line that it behaves exactly as you would expect. A rise after retirement followed by a decline by 80 and level thereafter.

The US line is similar until then but instead of going level it starts to climb again. Obviously that is a bad thing because there is no opportunity to replenish resources then and saving evaporate very quickly.

Here’s Why

Also from the article. Medical costs by age.

You will notice the UK numbers are fairly level while the American numbers rise dramatically.

You might argue the US provides better healthcare and that it costs more is just the way it is. People in the UK may die of bureaucratic issues while in the US they die of financial issues. That discussion is a difficult one and I doubt there is a reasonable solution.

The point.

Understand how your context works. It may hold things within it that make life easier.

Sometimes the system works in your favour. Take advantage of those.

I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.

Please be in touch if I can help you. 705-927-4770

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