Recently, I had two conversations about the plans for healthcare in financial independence.
One was with an ex-colleague who I met up with last week. The other was with a small group of friends from diverse backgrounds who enjoy discussing the nuts & bolts of wealth management.
The conversation didn’t trigger any fear to take stock of my plan for healthcare in financial independence. Rather, if you have some major life milestone trigger, you should take stock of some of this stuff.
Given where I am, with the wealth, what is the present value of my healthcare liabilities today?
Have I risk-managed most of the considerations, or do I still have shortfalls aside from the funding for my other financial goals?
I think some of these things are still pretty jumbled up in my head, so I am going to list them out in a table form.
I learned this from software/system safety at work a long time ago. Create a fxxking register.
So here it is:
This is my healthcare planning register.
This is an image if you find it is easier to read (but may not always going to be the most updated)
It is not yours. It may not be fully formed at this point. You can reference this, reflect upon your own situation and tweak accordingly.
You may or may not agree with my choices, but that is my choice, and you can ask how I think about them.
Portfolios or Financial Commitments to Firm Up
Most likely, these are the portfolios to model.
- Portfolio to pay for the shield premiums for Restructured A. I came up with some ideas for medical sinking fund for shield plans and riders here and here. It is $300k for the private shield and $350k for the rider in present value, done two years ago. If you are rich enough, this might be your consideration. I think this is the one that I will have the most difficulty. Let me try to model it again.
- I have to firm up some of my other future financial liabilities/goals and how much to fund them so that I can figure out if I need to whether I will have enough for nursing home costs so that at least my brother can check me in if necessary. The simple formula here is net wealth – 5RM HDB – financial liabilities and goals that are high-priority commitments.
- A critical illness (CI) medical sinking fund to pay for this need in the future if necessary. Most likely a lump sum that grows with inflation. Most likely, this is not a large sum. This will take care of early and advanced stages.
- A portfolio for recurring preventive and long-term care needs. In my essential and basic expenses, there are money set aside for hospital visits, but I would probably need to size this up.
I will likely use a layered financial planning approach.
This means don’t plan for like the most “sui sui bo zao zui” plan, which in English means the the plan with zero loopholes, most conservative that I can accept.
You come up with this, and it cost you $2 million. What for? Need to buffer so much might as well don’t think about retiring.
The first cut is to have something sensible first and find out how much that would cost, and whether I am ready for it.
Then we think about the rest later.
Anyway, this is likely to change over time. This is the essence of my Kyith’s Notes series. This is not financial advice. This is roughly my plan.
In the next few sections, I would like to capture some notes from these discussions related to this topic that I don’t want to slip by (mostly because I don’t really feel like being that ass who keeps asking people and left them wondering “I thought I told you that before liao.”
On Nursing Homes and Alternatives
One of my friends in the discussion is more tune in to the healthcare sectors than most. I want to capture some of the points. (It contains opinions, which you might disagree with, which you can comment below)
On whether the huge nursing care cost is something to be worried about, maybe our pessimistic nature immediately brings us to think about nursing care as the be all end all solution.
Not everyone can go to nursing homes as they have strict admission criteria and entry is based on their own discretion. There are case studies where people were rejected from multiple nursing homes.
There is a disconnect between the elderly philosophy here and in Japan. Over here, it is more passive where in Japan, there is a strive towards elderly independence.
Financially, if we include the cost of nursing, most people can never be financially independent. There are a few areas that will make spreadsheet planning difficult. Even healthcare workers themselves might not be able to plan that well.
You will be surprised that stroke patients who cannot move one side of their body can return home to self-care independently with rehab, home modifications & equipment.
The cheapest nursing home cost comes up about $1,200-$1,600 a month after the maximum subsidies (Kyith notes this is 2023 figures). The waitlist is one to three years and with strict functional requirements and they must have exhausted all other options.
How long do we plan for?
Do we plan for 80 to 100 years old or 85 to 100 years old? We also do not know how long we will live. The sucky part is that we can be bedridden and not die for fifteen years. This is a true case study where the limbs are stiff, cognitively they are not there but still alive. The quality of life is bad because the family is not well off and not well educated.
When a patient requires ANY medical attention in a nursing home, the patient gets sent to a hospital. Nursing home is limited to only medication, wound dressing at maximum. These are things helps can do also.
Caregivers are frequently trained by hospital staff to learn to care for their employers. They learn to provide insulin jabs, wound dressing.
For anything that is more advanced, we would rely on hospital-to-home doctors and nursing.
Singapore’s elderly care is built on the backbone of helpers. This is a very horrible situation.
Mode of transportation is also important. If there is no car, and the person is hard to transfer, then wheel chair friendly transport isn’t very cheap if the usage is high.
Among the assisted living facilities in Singapore, Red Crown is quite famous among the insiders.
If you have a higher net worth, the quality of care can be better.
Here are stuff money can buy:
- Elderly care/nursing home
- Assistive equipment such as motorized devices, walking aids, prosthetics, cushions and home modifications such as grab bars, and toilet designs.
- Rehabilitation. This is big because public hospitals are swarmed and most conditions have a golden window for rehabilitation like 30 days for stroke, where rehab outside of that window will have reduced effect. If you can afford 7 days a week of private rehab, you are many, many, many ties better off than a public patient even A class. My friend has seen many patients not fully recover just because the hospitals they are at don’t have the manpower to attend to them. (Note Physio 1h is $140-180 and OT rate is about $170 to $350)
- Preventive / lifestyle. If you can avoid hypertension and diabetes, your life outcome will be ten times better than those with them. These two usually lead to kidney failure, heart failure, brain issues, liver issues. Do exercise and early checks.
I also one to capture Patrick Teo’s sharing on his CPF Wealth Tree on his family’s nursing home experience:
On our life’s journey we can learn either through others’ experience or through our own.
My sharing today is on the cost of long term medical care. Medical advances have made it possible for people to live longer. Unfortunately that doesnt always mean a longer healthy lifespan. It could just mean living longer in ill health.
My 95 yo mother is currently in a nursing home. She was healthy and able to walk on her own daily till late last year when she had a fall and had to be warded in hospital. Since then she was not able to walk and needs constant care. We decided that putting her in the nursing home with a team of trained care givers and doctor would be the best option for her. That comes with a cost. And this is something I want to share so that we can better prepare for it when our turn comes.
The nursing home charges $3K pm for a 3 bedder room and with the many incidentals (like follow ups at hospitals which required ambulance transportation), the bill quickly adds up to $5K pm.
Last month (Apr), an elderly resident there contracted Covid and it spread to my mother. She ran a high fever and her O2 dropped to low 80s. The doctor put her on a drip and gave her O2. Thankfully my mother tested negative for Covid on day 8 but she still needed O2 supplement.
The bill for all that added up to $8K for month of Apr.
The nursing home has many infirm elderly residents there and I imagined that their families must have decided that this was the best option for their infirm elderly. The nursing home is clean, the care givers (both local and foreigners) are dedicated, patient and trained. And we know the doctor / owner who is from my Church.
We are comfortable placing our mother with the nursing home and satisfied with how they handled the Covid situation.
I have many siblings and we all chipped in to defray the bills to our comfort level. But going forward, our own families are smaller with one to three children each.
The financial burden and stress will be high on them if they were to take care of two infirm elderly parents at the same time. We should therefore do our part to lessen that burden for them by:
- Keeping healthy so that we extend the healthy lifespan and shorten the unhealthy lifespan
- Saving up for our own long term medical care which can run into years.
- Having adequate insurance
- Doing up your LPA so that your care-givers (donees) have access to your savings to pay for your long term care and medical needs when the time comes.
If it ended up that you dont need long term medical care, at least the money saved up would have provided great peace of mind, and be a good bequest for the children!!
I hope that my sharing have provided some food for thought in your approach to your financial / retirement planning to make it more holistic and robust.Patrick Teo
Ok that is it for now. Do leave any comments below and I will try to answer or share my thoughts if possible.
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