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Working Out and Eating Right: A Strategy for Financial Success?

Many of us have undertaken resolutions at one time or another to exercise or eat well, possibly with the aim of losing weight, feeling healthier, or avoiding diseases or medical conditions to which we might be predisposed.  But, few of us have likely considered the extent to which taking better care of our bodies would benefit our finances.  However, healthy behaviors can positively impact our cash flow and financial position, e.g., by reducing insurance costs during our working years and by lowering out-of-pocket medical expenses in retirement.

Out-of-Pocket Medical Expenses. Medical costs can comprise a significant portion of expenses in retirement, particularly for those who face chronic diseases such as diabetes, serious heart disease, an autoimmune Medical Expenses in Retirementdisorder, cancer, etc.  According to the Employee Benefit Research Institute, the median cost at age 65 for medical expenses throughout retirement (including Medicare Part A and D premiums, Medigap premiums, and out-of-pocket drug expenses) is $64,000 for men and $83,000 for women.  However, for those in the 90th percentile, costs average $116,000 for men and $131,000 for women (see chart to right?).  Some of the factors pushing people into the 90th percentile are completely out of their control, but others are not.  Diabetes, for example, might be avoided or mitigated by healthier choices regarding diet and exercise, which in turn impacts the frequency and cost of doctor visits, drugs, hospital stays, and other medical costs in retirement.

Insurance.  Healthier lifestyles could also impact insurability and the cost of insurance earlier in life.  For instance, most people are aware that smoking can double or even triple the cost of life insurance but may not be aware that obesity can drive up life insurance costs as well.  According to financial planner and trained pathologist, Carolyn McClanahan, if your body mass index (BMI) hits 28, rates might start increasing on life, disability, and long-term care insurance, and if it hits 31 or 32, higher rates, especially on life insurance, is virtually guaranteed. We are currently working with a client to get a term life insurance policy.  If the client drops 15 pounds, they will save $8,850 on a 10-year term policy and $18,735 on a 15-year term policy.

There are many reasons to try to stay healthy, but be sure to add financial benefits to the mix.  And if you’re wondering what “staying healthy” might mean for you, in addition to asking your doctor, you might check out the Living to 100 website. Its calculator will estimate your life expectancy based on current medical statistics and will offer recommendations on lifestyle changes (e.g., drinking less coffee, taking more aspirin, doing more aerobic exercise) that might add to your health and longevity.  As always, if you have concerns about medical expense planning or experience a major health change that might impact your finances, give us a call so that we can help!


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