On my personal Twitter profile, I describe myself as a “progressive pragmatist and vice-versa.” What that means is that I tend to look at things optimistically but with a healthy dose of realism. I want things to go well. I want everyone (myself included) to be prosperous and feel important. But I know, from my own upbringing and experiences of family and friends, that positive thinking alone won’t overcome bad odds.
Why am I thinking so philosophically on a Thursday afternoon? Well, I’m sitting in Reagan National Airport — fun fact: “trust, but verify” was a favorite saying of his in relation, ironically, to the Russians, who originated the saying — after attending an event focused on employee benefits. I’ve been to a lot of these types of events and the mood at the more research-focused ones is generally somewhere between unbridled optimism and abject despair.
“The economy is great right now, unemployment is at an all-time low and benefits have never been more important!” 🥳
“Yeah but employees are paying more and have no idea how to use their benefits.” 😩
The thing is, both perspectives are a little bit right. That’s where you come in.
If you’re in the FIRE vanguard, retiring in your late 20s to mid-30s, you’re (hopefully) living the dream healthy enough to enjoy your retirement to its fullest. If you’ve planned your housing, transportation and other common living expenses well, they will be quite manageable within your budget until it’s time to shuffle off this mortal coil.
But keeping that coil tightly wrapped gets harder with each passing year. Don’t risk your financial health by compromising on your physical health — get insurance. And not just the cheapest insurance. Make sure it’s good enough that it doesn’t leave you with huge bills if something bad happens. Such decisions and expenses should all be part of your FI plan, even if it means a few extra years of saving to be fully prepared for a long, healthy life of early retirement freedom.
Here are some tips for that early retirement health care party…
Now that you’ve read her post, you know that HSAs aren’t the magical “triple-tax-advantage” savior some might claim. Yes, there are definite benefits to HSAs if your circumstances are right (more on that in just a moment). But as we’ve said many times, HSAs are a contextually good idea attached to a pretty bad one — HDHPs — and you have to really lean in to avoid letting that bad idea drive your future more than the contextually good one.
Here’s the bottom line: Our “best in the world” health care system puts a great deal of pressure on us as individuals to make the right decisions about our health without giving us much to go on. It’s a system wrought with tradeoffs, and no one type of plan or solution it right for everyone. While HDHPs aren’t doing what they were meant to do, which is to make us better healthcare consumers, older plan designs like PPOs and HMOs aren’t doing that at all, and in fact could end up costing you more than an HDHP, with no added tax benefits and without drastically improving your health and longevity.
The TL;DR message is this: if you’re young and invincible or old and rich already, you can get an HDHP without much further consideration. For the other 99%, read on about some of the challenges we face as “consumers” of healthcare, with an HDHP and without one.
As I’ve reading through blog entries and comments in the FIRE community, two things have come to mind:
Y’all are some smart mofos! Seriously, reading what everyone is saying about how they consider their benefits in relation to their income, savings and wealth is endlessly entertaining and rewarding. People are taking the time to really think about what they’re doing, learning by trial and error, and experimenting with strategies that work for them based on where they are in their lives and, often, where they are in the world. Keep it up, people!
It’s human nature to think of your health insurance in the same way that you think of other kinds of insurance, like your auto or house insurance (“P&C”), or life, disability and other accident indemnity insurances. It works to an extent, but be careful not to think of them as interchangeable. That’s what today’s post is about.
Recently, at a PTA meeting for my daughter’s school, the school’s two parent-volunteer yoga instructors gave a short presentation (with student participation) on the easy yoga and meditation techniques they practiced with our kids. It was fun, funny and heartwarming to see the kids really get into their practice. It was also illuminating for us as parents to try it ourselves. When it got to the mindful meditation part, one of the instructors mentioned how focusing on your breath opened a path to the amygdala, which “will get you off of the treadmill of worry and into relaxing mindfulness.” I used to find these types of descriptions a little silly, but the more I’ve tried to be more mindful in my own daily life, the more I can buy into this idea of needing a real shift in mindset to get from worry to deeper conscience.
It reminded me of a book I read last year called Scarcity: The New Science of Having Less and How It Defines Our Lives. It’s a wonderful book that can impact the way you approach both personal and professional challenges. It’s more of a research-oriented book than self-help, so don’t go into it expecting to get a blueprint for finding mindfulness. It’s more about the research the authors did on how scarcity impacts how we think and make decisions — and it really does.
As you seek financial independence, chances are you are making plans that are deeply impactful to the two most common forms of scarcity: money and time. You’ll want and need to ensure that you’re making the most of both to reach your FIRE goals. But you’ll also want to make sure that you understand when you’re making decisions based on a scarcity of one or the other, or both, and what you can do to work against making bad decisions.
I am a terrible runner. Seriously, people comment on the way I look when I run, like “Does it hurt to run like that? It looks really painful.” In fact, it sometimes is painful. Before I clued in to buying special shoes for overpronators, I would frequently return from a run to find that my socks were bloody at the ankles from my heels brushing into them.
Yet in spite of my clear lack of form, I have never sought professional instruction for running. I’ve usually just looked at other runners who pass me and try to emulate their style. I’ve made some gains and rarely shed any blood these days, but I’ve relegated myself to being a “slow runner” even at my fastest.
But this morning a small bell rang in my head and said, “Hey dummy, you’ve watched YouTube videos to help you fixed a clogged sink, repair drywall and make a tire swing for your kids. Why haven’t you watched one for your bad running?” I’m super-motivated by the guilt-trips my inner dialogue lays on me, so I searched for “running form correct technique” and came upon this video:
You could say that the video could be a few minutes shorter, but at under 10 minutes it provides great advice in a simple, easy-to-understand format. I watched it and then immediately set about my run, thinking about the fundamentals the video covered…and I cut more than 30 seconds per mile from my time! This was the first attempt at following very easy advice and it resulted in a roughly 5 percent improvement in performance.
That type of metric works for me because it’s easy to track. In about the time it takes me to run a mile, I was able to save what will be countless minutes (and better race results) of time spent flailing from head to toe.
The reason I’m talking about running on a blog about financial independence and benefits is because of another metric we hear and talk a lot about: how much time you spend learning about your benefits. Various studies have shown that the average American worker spends anywhere from 20 to 5 minutes researching the benefits they would like to elect each year. If their company is clued into this statistic and has a solid communication plan, they may be helping you make the most of that limited time. But chances are they are not, and you are not making the most of your benefits as a result.
So, here’s a question and a challenge: What is your metric for learning more about your benefits and what are you willing to do for that metric? Is it money? Quality of life? Time? Sense of achievement? If I told you that, regardless of what your employer does for you, that by spending one hour every open enrollment period researching your benefits could save you thousands of dollars and/or accelerate your FIRE goals, would you do it? Would you shave off that extra 30 seconds by simply paying more attention?
As it appears the rest of the free world is doing right now, I’m taking in episodes of Marie Kondo’s Tidying Up on Netflix. I hadn’t read the book, so her combination of Japanese precision and Buddhist respect for the contributions of all things has been fresh and energizing.
For those who aren’t familiar with Marie’s “KonMari Method” is a collection of organization techniques, combined with an Eastern spiritual mindset, intended to “spark joy” in people’s lives by helping them remove clutter from their living spaces, thereby removing excess from their lives.
As both a pragmatist and a cynic, my excitement for the Kondo’s methods are tempered with the reality of working and helping run a house with kids with other ideas of what sparks joy. In other words, I am down with the KonMari method, it’ll just probably be a phased rollout in this house.
All that organizing got me thinking about how the FIRE goals of financial freedom and early retirement are perfect bedfellows to KonMari’s mission. The idea is to train yourself to live as modestly as you can, and through that modest living you regain control (financial, physical, emotional) of your life, thereby making it easier for you to spark your own joy.
(Sidenote: I must admit that, as an optimistic cynic, typing “joy” is hard for me — “satisfaction” is much more my speed. But Marie’s spirit is pretty infectious, so I’m powering through it!)
That train of thought, in turn, got me thinking about what kind of the decluttering we can do with our benefits. There’s plenty, so here are some ideas.
I got an email the other day from someone who referred to what we usually call “resolutions” as “intentions.” I like the change because, confession, I’m not much of a resolution guy. I like goals and do my best to make them both practical and aspirational. With resolutions, it feels more like something you’re told you should do every January 1st because it’s a new year and a new start. OK, great, but that implies that things didn’t go as planned in the previous year, which in turn implies that plans are finite. All of these are true for those who want it to be true. If that’s you, then congratulations on your 2018 goals and good luck in 2019!
For the rest of us, let’s go with “intentions.” It implies that you’re going to do it but not only that — it says that you’ve planned for it, you’re ready for it, it’s going to happen. You intend for it to happen, so it will happen. Go forth and conquer!
With that in mind, here are my three intentions related to benefits in 2019 and beyond, which have been my intentions for years already, through trial and error, consultation, experimentation, and good ol’ luck!
We’ve written some articles on considerations to make for those who are selecting employer-based benefits and will write SO MANY more that you’ll not know what to do with all of them! But for today, since it’s the first day of the annual individual health plan open enrollment period (OEP for short, and it lasts Nov. 1-Dec. 15, 2018), this post focuses on those who are self-employed, contractors, gig-economy adventurers or, if you’re really lucky, already retired and way under 65 years old. If any of these scenarios apply to you, you’re likely eligible to buy an individual health insurance policy and individual-based other coverage, too. Here’s a few tips on what to look for and what to avoid.
In the first part of this two-part post, we covered premium and deductible, which are the two main considerations most of us look at when deciding to pick a health plan every year through our employer or on the open market.
There’s no doubt that your FI minds should gravitate to what you might spend on an annual basis, combined with how much you’re on the hook for if you have to see a doctor or specialist. But the way health plans get priced the way they do depends on their coverage levels — copays, coinsurance, prescription drugs, mental health coverage and more. This post digs deeper into those plan variables to help you decide what’s going to be the most cost-effective and compatible plan for your and your family’s personal health needs.