gearing up

What the Election and a Trump Presidency Mean for Early Retirement

Last week was a big week in the U.S., and whether you’re happy or sad about the outcome, the man the electoral college will be electing as president will have an impact on everyone who is already early retired, or who is eyeing early retirement, at least if you plan to stay in the States.

One of the biggest reasons we had always planned to retire in 2017, not in 2016, was because we wanted to know whether the Affordable Care Act (ACA) would be likely to stick around beyond Obama’s term in office before we left our jobs and had less flexibility to adapt to big changes. The ability to buy affordable health insurance under the ACA has been a huge boon to early retirees, and if that goes away, then a lot of calculations will have to change for a great many of us.

And now we have the answer about the election. And president-elect Trump has promised (and then unpromised) to repeal the ACA, along with a host of other non-specific promises like cutting taxes, ending trade deals, making the Fed less independent and changing monetary policy. What does it all mean for us, and for others in similar situations?

While you know we have strong feelings about a lot of his views (topping the list: not believing in global warming, his statements on women, people of color, LGBT people, non-Christians, and his inciting of violence at the rallies he apparently intends to keep doing as president, etc.), this isn’t that kind of post. This is about how a Trump presidency will affect our finances, and whether we need to re-evaluate any of our plans accordingly.

Though a lot of things won’t be clear for months, let’s take a look at what we currently know about Trump and early retirement, from health care to taxes and beyond.

What the Election and a Trump Presidency Mean for Early Retirement

Potential ACA Repeal

Starting with the biggie first: Obamacare. The ACA has significantly increased people’s ability to retire early, because it gives people who aren’t connected to employer-based insurance the ability to buy health insurance at essentially a group rate, because the risk is shared across a bigger population, and it gives us all protections via bans on denying coverage for pre-existing conditions, and on capping lifetime benefits.

One of Trump’s main campaign promises — echoed by GOP leadership — was to “repeal and replace” Obamacare. (He’s not even in office yet, and he’s already walking that promise back, but it’s clear that big changes will happen nonetheless.)

trump-wsj

For the 20 million or so Americans who currently have ACA coverage who wouldn’t otherwise be eligible for or be able to afford health insurance, repealing the ACA will be devastating, unless it is replaced with something with roughly equal federal subsidies, which Republicans are staunchly opposed to. So for those without the means to pay more, this will clearly hurt, regardless of what the replacement plan is. But let’s assume that early retirees with sizeable assets aren’t in that category. Here’s what we know right now on the ACA:

Could the ACA be fully repealed? Can Trump actually repeal it on day 1, as he said in his election night speech we wants to? Experts say no, including former Senate Majority Leader Bill Frist, a physician and staunch Republican. Full repeal would require 60 votes in the Senate, which Republicans don’t have. They can, however, repeal parts of the law through the budget process, but that will take more time, and Trump himself can undo parts of the law through executive order, such as the mandate to cover contraception (if you want them, get those IUDs before January 20, ladies. Speaker Paul Ryan also won’t say whether contraceptive coverage will make it into the new law).

Many believe that Congressional Republicans will not want to be blamed for taking coverage away from those 20 million Americans, and theorize that they won’t fully repeal the ACA until they have a new plan ready to go into effect, but will instead chip away around the edges. Figuring out exactly a new law looks like will take a while, since current outlines of alternate health care plans are not especially detailed. During the fight that is sure to come over details of a new plan, parts of the ACA are likely to stay in effect, though they will almost certainly repeal the individual and employer mandates at their first opportunity, along with the minimum benefits requirements and individual subsidies, making health care immediately more expensive to retirees. Of course, others think Congress will try to repeal it all before they have a replacement ready, which will mean that those 20 million lose coverage, and will raise a bunch of questions about what will happen to popular provisions of the law, like annual maximum limits, being able to stay on parents’ coverage until age 26, and — most importantly — coverage for pre-existing conditions. (For what it’s worth, Trump currently says there will be no loss of coverage for anyone… we’ll see.)

Will pre-existing condition coverage go away? There’s a bit of an economic quandary that Republicans will now have to tackle, which is how to keep costs low without an individual and employer mandate, which they have sworn will be the first thing to go. In short, here’s the challenge:

Young, healthy people don’t see a need for health care, and don’t typically buy insurance. However, older and sicker people do, because they desperately need it. That means that policies become expensive, to cover the costs of those older and sicker people. You need younger, healthier people in the pool, too, to spread out the risk and costs. That has always been the intent of the individual mandate: to get those young, healthy, cheaper-to-insure people into the pool to keep costs down for everyone.

How the Obamacare Individual Mandate Keeps Costs Down

The main failing of the ACA to date has been not getting enough of those young, healthy people to buy in, so the cost savings were never realized. But now, let’s consider what Congress will do about their repeated promises to get rid of Obamacare’s main provisions. Without an individual mandate, which Republicans staunchly oppose, you can’t contain costs for people’s pre-existing conditions, because you won’t have enough young, healthy people in the system to even out those costs. But Trump is now promising to keep coverage for pre-existing conditions while also bringing costs down, which is hard to understand mathematically.

With No Individual Mandate, Health Care Costs Go Up for Everyone

A big way to cut those costs would be to deny coverage for pre-existing conditions, which was the norm before the ACA went into effect. Of course, doing that is not without shared cost, either, as losing coverage for pre-existing conditions will make people with chronic conditions less likely to seek preventive care for those non-covered conditions, and instead only seek care once things have reached an acute or emergency level, when treatment is much more costly. (They are also more likely to go without insurance if the cost goes up, which will magnify this problem.) Worse, if they can’t get coverage for those conditions or are uninsured altogether, then they are unlikely to be able to pay their medical bills, which shifts the costs to all of us in the form of — you guessed it — higher health care costs. It’s this very problem that the ACA sought to address, and for which Republicans haven’t yet offered an alternate solution. We’ll have to wait and see where this goes.

What about subsidies? Trump and Congressional Republicans have made clear that they plan to do away with the subsidies that help early retirees as well as many low-income and working families. And they have said that they plan to shift Medicaid to a block grant system, and remove federal incentives to expand Medicaid to adults above the poverty line, which will take away the subsidies for even more early retirees on the lower end of the income spectrum (not to mention actual poor people, who need it more than we all do). While this may sound innocuous, historically block granting has led to bigger hurdles between low-income people and benefits, which could impact early retirees. We are in the group of people who will be affected if Medicaid expansion goes away (our entire income plan will be nullified if this happens), so we now have zero idea what we might expect to pay for health care once we lose employer coverage.

What’s coming instead? Every indication suggests that the GOP will be interested in shifting toward a system more heavily focused on health savings accounts, perhaps accompanied by tax credits to be used on state-level coverage. And while the FIRE community tends to love HSAs, we generally love them in concert with traditional health insurance that has the protections guaranteed by the ACA, like an annual out-of-pocket max, and no cap on lifetime coverage. If we shift to a system where we’re solely reliant on our HSAs, then costly health events like cancer, a car accident or a chronic condition go back to being things that could bankrupt us, even if we’ve saved seven figures. That prospect is beyond scary to us, so we’re anxious to know what options the Republican-controlled Congress will give us. And shifting health plan oversight to the states will mean that states which have historically made things tough for the poor will likely have health plans that are extremely costly for early retirees, while states that expanded Medicaid will likely be more focused on ensuring near-universal coverage. (This might be reason enough to consider moving to a different state if you’re in a non-expansion state.)

Could catastrophic coverage plans be the answer? We’d expect that plans that cover only catastrophic events will return in this case, but those plans don’t cover any sort of routine care, expensive things like mammograms or MRIs, or prescription drugs. Many early retirees would have no choice but to move abroad and get their health care in less costly countries — or to forego preventive screenings and routine health care at their own peril.

What happens now? In the meantime, consensus seems to be that folks who are signing up during the open enrollment period now will still have their ACA coverage start January 1, and that it will have to stay in place until at least the end of 2017. So if you were planning to get on Obamacare, don’t let the election results stop you — hurry up and sign up during the short open enrollment window. Just keep your eyes open for new developments. (And seriously, stock up on birth control. I’m 100 percent sure that coverage is going away.)

President Abraham Lincoln's Gettysburg Address

The Gettysburg Address

Tax Changes

The tax changes promised during the campaign could potentially be favorable to early retirees if they happen, but we shouldn’t necessarily root for them — analysts have said that, while standard deductions would increase for everyone including lower-income retirees, Trump’s tax proposal would increase deficits by nearly $10 trillion over a decade, and would increase our national debt to nearly 80 percent of GDP by 2036. Paying off that much debt would virtually require higher taxes in the future, or if we “refinance” our debts (also known as “default on”) as has also been promised during the campaign, then we can expect a huge loss of investor confidence, a massive devaluation of the dollar, a global financial crisis, and who knows what else. Not to mention that you probably hold lots of U.S. treasury bonds in your portfolio, as we do, and so a bond devaluation will affect you directly, doubly so if the dollar also tanks, triply so assuming that all the markets tank together.

And cutting spending to pay for the cuts doesn’t add up mathematically, so that’s not the answer either — this article explains in detail how you can’t get to the numbers Trump is projecting, especially if he exempts Medicare, Social Security and defense from cuts as he’s said he would. As for other campaign promises, they have government spending implications. Rounding up and deporting millions of undocumented immigrants would increase federal spending enormously, as would investing in infrastructure as promised (not that that makes the latter a bad idea!). It’s unknown whether Congress will enact the tax cuts as proposed, but we know we won’t be hoping for them, based on all of that. Tax law is already exceedingly kind to early retirees who keep our incomes fairly low (which doesn’t necessarily mean keeping cash flow low), so additional tax cuts are of little value to us. Plus, we like roads, schools and national parks, which taxes pay for.

But, given that the GOP now controls the White House plus both houses of Congress, we should all expect that tax cuts of some kind are coming, presumably along with some spending cuts that will upset some people. We’ll have to wait and see what they are.

Economic Conditions

Market futures tanked on election night in response to the results, but then markets ended up the next day. So the markets clearly haven’t decided what it all means.

As for economists, experts on both ends of the political spectrum, including those who advised Republican presidents, have generally predicted that Trump’s isolationist economic policies would lead us into recession, perhaps a long-term global recession. But, many of these same economists also predicted that the Brexit vote would cause immediate recession in the UK and Europe, and that hasn’t happened, at least not yet.

One thing Trump has made clear, however, is that he disapproves of the Fed’s recent monetary policy decisions. Janet Yellen’s term at the helm of the Federal Reserve ends in 2018, so Trump will appoint her replacement along with several members of the board of governors. The Economist predicts certain near-term recession if Trump pushes for more hawkish monetary policy from the Fed. If, on the other hand, he pushes for monetary policy that is geared toward getting him re-elected (which would also mean a less independent Fed), we’d be less likely to see a recession, but more likely to see high inflation, which would hit those on a fixed income (ahem, early retirees) hardest.

It’s hard to know what Trump will decide, but what we do know is that we’re due for a recession anyway, by historical standards, and that presidents need Congress to act on their economic agendas. Will members of Congress and Senators really vote to abolish existing trade deals? Or propose isolationist policies, against the advice of every economic adviser? Or vote to increase the deficit and national debt to record levels? Add another one to the “wait and see” list.

In the meantime, we’re talking about saving more than we thought we needed, even though our retirement budget is already significantly padded, just in case the next recession is longer than recessions tend to be. With my hefty travel miles balance (crossed a million miles!), we know we can still travel for years even if we don’t have much money to spend, so long as we travel to inexpensive places.

1 million miles in the bank!

I hit the double comma milestone!

And while home, we can still do the outdoors activities we love that are or can be free (cycling, backcountry skiing, hiking, etc.), regardless of economic conditions. But still, that extra extra padding will give us more peace of mind. And we might try to keep consulting immediately after leaving our jobs, just to keep a foot in the door. Because going back to work will only get harder than it already would be if we find ourselves in an extended recession.

Potential for Moving Abroad

It was widely publicized on election night that the Canadian Immigration site crashed because so many Americans were researching how to leave the country. But lots of early retirees decide to leave the U.S. for a whole bunch of apolitical reasons — geographical arbitrage, tax advantages, cheaper health care abroad, or just to see the world. Like our friends Jeremy and Winnie who write Go Curry Cracker.

While the election outcome hasn’t changed anything at this point (though it’s not hard to see how an “America first” agenda could sour relations with some countries and make travel harder for Americans), it’s already true that moving to virtually every English-speaking country in the world is exceedingly difficult. And if you’re planning to be early retired when you move, then your chances drop to almost zero, because countries are mostly only willing to take you in if you have skills that align to their most in-demand occupations, and you plan to use them while there. But even then, to move to an EU country, you have to prove that you’re not only the most qualified person for a given job in the country, but that you’re the most qualified person in the EU, and that means competing with people who certainly have many more language skills than the average North American. To move to Canada, New Zealand, Australia or the UK, you also have to prove that your skills are in-demand, that you have lots of assets and are in good health… and that you aren’t too old, which most define as mid-30s or younger.

Of course, going “permanent nomad” is still very much an option, but expect to be time-limited in most countries by visa periods, and to pay more to live in more short-term rentals. Or move to a less developed, non-English-speaking country. Or, if you’re dead set on moving permanently abroad, try New Zealand. They have the most lenient requirements on new immigrants and have been actively working to recruit Americans who are considering moving to Canada.

As for us, we’ve always planned to keep the U.S. as our home base, and we’re not changing that plan as of yet.

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What’s Changing for Us?

There’s way too much in the “wait and see” column at this point for us to know exactly how the election affects our early retirement plans. But we do know that this outcome is forcing us to cool our jets. While we had been saying that we could retire earlier in 2017 instead of at year’s end if we get good year-end bonuses this year, given how ahead-of-schedule we’ve gotten, we’re now recognizing that we can’t make any big leaps until we know for sure how we’ll be getting our health care after we retire, and what it’s likely to cost. Health care is too important to us, and its costs are potentially far too high, to gamble on it.

We know that not everyone is as risk-averse as we are (okay, mostly me), but a single bout of serious illness could wipe out a person’s savings before the ACA went into affect, and it’s possible we’ll be back in that situation very soon. Regardless of your politics, this fact should breed caution in any financially prudent person’s mind.

One (tiny) potential upside. Because we’ve done all of our retirement planning in the era of the ACA, we’ve been building our retirement income plan around the assumption that we wanted to stay within Obamacare subsidy limits, which has meant constraining our retirement income. If subsidies go away, then the only downside of earning more in retirement will be paying a little more tax. But even in the highest brackets, which we surely will not be in, you still always come out ahead by earning more. So the disincentive to work in retirement will go away if subsidies go away, which could give us more flexibility. That said, if subsidies go away along with annual out-of-pocket maxes and lifetime caps return, then we’ll clearly be worse off. So we wouldn’t call this an actual upside. Again, we’ll see how this shakes out.

If you’re dead set on retiring now, this might be a good time to explore your options for expat living, to try to find a spouse who can get you legal residency in a country with better and cheaper health care, or to go ahead and accept that vampire’s offer of immortality. (Bad time for a joke?) As for us, we’re way too attached to each other and where we live to consider those options, so we might find ourselves working just a bit longer until the way forward becomes clear.

Safety Pin -- We are a safe space

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How About You?

How does the election outcome change your or not change your plans? Anybody going to delay your early retirement to see what’s coming? Or trusting that you’ll be able to figure it out no matter what? For folks who are already retired, what does the potential loss of ACA benefits do to your thinking? Let’s discuss in the comments!

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165 replies »

  1. By the way: What’s that last picture doing there?

    I’m sorry to read this for all of you guys.

    In the Netherlands, we have an individual payer tax system AND everybody is obligated to pay in – children under the age of 18 are free, by the way. I’m paying roughly 1000 euros per year for coverage with a 385 euro annual maximum co-pay. Also, I’m paying a small percentage of my income from work into it – which will just go away if I were to stop earning an income.

    That is an amount that one can easily budget into their annual spending post-retirement.

    I think Dutch healthcare has the same quality as US healthcare for 100% of the people, 99.95% of the time. There are some very very rare conditions where the US healthcare system would be better, provided that you’d be able to pay for the treatment (which, let’s be honest, most people aren’t).

    I hope for you all that the replacement has some advantages too.

  2. Thank you for putting this together and publishing it so quickly after the election. I’ve been wondering for the last few days how your plans would be affected. Wishing you guys–and us all–good luck during this insane “transition”… :'(

    • You’re welcome — we needed to think this stuff through for our own sanity, though we obviously won’t know much for months at least. Here’s hoping they figure some of this stuff out sooner rather than later so we all at least know what we’re planning around!

  3. No change in our plans. Uncertainty makes planning really tough, which is why we started hedging our bets a while ago regardless of how election results panned out.

    Agree that loss of ACA will mean early retirees (and entrepreneurs) again take on tremendous risk to leave employee coverage if pre-existing coverage goes away. As a son of a breast cancer survivor and with Mrs. EE having autoimmune health issues I am well award of how bad that part sucks. However, working in healthcare, I saw daily many of the flaws in the law and how it was negatively effecting many working people. Therefore not surprised by how unpopular the law is due to the complexity of it. I also could not wrap my head around the law, written as much of the tax code is, in a way that incentivizes people to not make money, thus in effect punishing those who do as you point out. It leads to unintended consequences as most laws and ideas do. While great for early retirees and other low income individuals, ACA was really having negative impacts with working people getting crushed on both sides by both rising deductibles and premiums. My company for example which has always been very generous with benefits is keeping them in place for employees who are grandfathered in but, will no longer offer family coverage for new employees and raised our employer contributions substantially last year. Not crushing but noticeable for people like me, already in a job and earning a good living. Devastating for people like a receptionist in our office or a new grad with 6-figure debt.

    Economically, I think we’ve been of the opinion that we’re due for a recession regardless of who won the presidency b/c of such low interest rates for such a long time artificially propping up stock prices. Therefore when/if interest rates go up, bonds prices will crash while leading stocks to crash as well as people start buying the lower priced bonds with more reasonable yields. Until the rates do go up, savers are punished, because savings are actually losing value and stock prices continue to rise as people take on the risk since yields are similar anyway. It is a tough double edged sword, either way and that hasn’t changed.

    • One thing I keep wondering is if, in reopening the health care debate, we’ll actually address some of the REASONS for all the rising costs, namely people getting more and more procedures and tests done which are of questionable demonstrable efficacy. When the initial ACA discussions happened, the idea of evidence-based medicine got dishonestly labeled as “death panels,” which took that whole discussion off the table for years. Can we ever actually talk about getting healthier as a society by eating well and exercising to reduce our rates of metabolic diseases, and then stop paying doctors in ways that incentivize more procedures? Until we address that, we’re fools for thinking that ANY new system will solve the rising costs problem. (Raising this in response to your comment because you work in health care and see this every day!) ;-)

      • First I want to commend you for having this many comments on such hot button issues at such an emotionally charged time and keeping the conversation for the most part civil here. It is a credit to your writing and the audience you’ve built. Good job!

        Agree that our healthcare system for as long as I’ve been in it is a complete mess with horribly misplaced incentives that lead to unnecessary care that drive up costs. It is also important to understand that we have a medical system, not a health care system. Most medical professionals know little to nothing about diet, exercise, and stress management. From talking to doctors, nutrition is covered in about a day, often as a seminar and that is the extent of their training. They have virtually no training in proper exercise. That was my objection from day 1, ACA never addressed what I see as the problem, which is a horrible system. Instead it just expanded it to more people, with no realistic means of paying for it.

        In the meantime, there are various factors increasing cost. One is routine care for chronic conditions for a population that grows ever fatter and sicker. We are over medicated as a population due to a massive pharmaceutical influence on the system, with few people who even try to change their lifestyle to have greater health. This also leads to massive opiod addiction issues which add costs far beyond the direct costs of the meds. And we can’t even negotiate the price of our drugs with Medicare. Malpractice insurance is absurdly expensive due to a litigious system which has to be factored into payment systems to keep doctors in business, and that also drives unnecessary tests to CYA, further driving up costs.

        These are very complicated issues and I have lost hope for real debate and change from our political system as it currently stands. Any solutions from the right are immediately met with reflex “Republicans hate the poor.” and any from the left met with “Death panel” B.S or some other shallow arguments. I don’t like ACA, and I don’t think Trump will make the healthcare system great again, cause it never was.

        • Thanks for saying that. :-) (Side note, it’s so hard not to respond back with your real name! But your secret is safe.) ;-) Yeah, as you point out, there are so many deeply ingrained problems in our “medical system,” and any attempts to fix them are met with claims of being a special interest or worse. I also fear that no holistic changes are coming any time soon. Let’s just hope that we at least get some certainty in short order of what our health coverage might look like, so we can at least plan around *something.*

  4. Having already retired as a result of the ACA finally providing medical insurance without pre-existing condition limitations, and having our assets mostly in bonds, and relying upon social security income to supplement pension income on a monthly basis, to say the election results were upsetting is an understatement (more along the lines of catastrophic). I could elaborate, but I won’t here. What are we doing to protect ourselves? Stopping all home improvement projects, they take cash we must conserve. Cancelling all travel plans for next year and 2018 (Alaska was next year, France was 2018). Cancelling purchase of a tow vehicle and trailer for our classic car (no long distance traveling to various car shows). We haven’t moved out of bonds yet, but may start as early as today converting to cash. Signed up for the ACA at $1188 per month for me, and I’ll spend the year taking care of as many health related issues as possible in order to be certain I can obtain the necessary procedures while insured. We reduced Mr. AR’a part D coverage (scheduled to go from $68 to $88 per month) to a more affordable $23 per month with the new caveat that we can only use one designated pharmacy (so be it, we mail order all routine prescriptions anyway). We will spend 2017 very close to home (we prepaid for a vacation in February we can’t back out of, but that’s it for travel). We will continue to cut expenses wherever we can, and I may take social security at the first opportunity instead of waiting since all signs point to the government gutting the program, if for no other reason than I’ve paid into it all my life and would like to see something for my efforts before it gets phased out or converted. We have had many, many sleepless nights since the election (basically every night), and we walk around in a fog daily. I’m dreading the holidays because we’re so overwhelmed with worry. I have regretted retiring early and depending upon the ACA, but I (foolishly) thought enough of the program couldn’t be repealed that I would always have some form of insurance. The reality is the medical insurance infrastructure cannot support itself if young, healthy people aren’t required to participate, so the rest of the provisions are really meaningless without the entire pool of insured spreading out the risk. Paying $1600 per month for Mr. AR and I just in premiums is doable but tight right now, relying upon our assets to provide additional income on a monthly basis, but this will be the last year we can swing those premiums and I won’t sugar coat it, it’s going to be very tough to manage the budget in 2017 with the added costs, considering I’ll be paying 20% out of pocket to get quite a few minor procedures done, as well as a lot of dental work for both of us for which we have no coverage. I wish I felt even slightly optimistic, but I don’t. We’ll just have to hunker down and hope for the best. In the meantime, if you haven’t retired and you have group medical insurance, hopefully you can still COBRA out for eighteen months and wait out the wrangling to see what ends up replacing the ACA, but I would presume contraception and subsidies are dead on arrival 🔗 (wannabe safety pin).

    • I feel for you guys so much. I was thinking about you when we heard the election results, and wondering how your approach would change. It makes me sick to think about you cancelling your travel plans, but then I think we’d do the same if we were in your shoes. Hunkering down and saving more makes really good sense under the circumstances, at least until we have some clarity about where things are headed. :-(

  5. Wow. Great recap here! With any presidential change, a lot of uncertainty is created. That’s why I (along with most everyone else) was shocked to see the markets react the way they did after Trump was elected. I think on the surface, a lot of Trump’s policies sound good for business, which is why the market has been going up. We still don’t know what policy changes he’ll actually get done and what they will look like in the future. So the market hasn’t priced in the long-term impact of those changes yet because we just don’t know.

    I’m still in the accumulation phase and have a few more years to go before considering early retirement. Therefore, I’m not impacted too much in the short-term. As far as the long-term goes, who knows? It will be several years before we know the impact of Trump’s policies. The one thing I will bet on is he won’t be nearly as bad as half the country thinks, and he won’t be nearly as good as the other half thinks.

  6. Thanks for this detailed analysis given the fluid nature of the situation. And by fluid I mean that Trump already seems to be backpedaling on several campaign promises – long may that continue!

    We really do have to wait and see what pans out with healthcare. I was just saying to Mr. PIE this weekend that I just don’t understand how the economics would work if they take away the individual mandate – as beautifully illustrated in your graphics. I’m more than happy to believe that this level of economic understanding is beyond me – but on the surface it certainly doesn’t add up.

    Trump talked several months ago about how HSA’s would be used for individuals to fund their own healthcare. Again, that’s just doesn’t add up for me. Most of the US population does not save for retirement, they don’t save for college. They are now expected to save for healthcare? Good luck with that!

    I don’t just worry about the state of healthcare right now, I worry about it for 4 years time and 8 years time. Are we going to dismantle and rewrite the system with every new administration? (my poor brain can even fathom Trump lasting 8 years). It’s got to cost a lot of money for insurance companies and healthcare providers to keep changing their infrastructure and systems. Who pays for that? oh yeah….us!

    • Oh, the economics aren’t beyond you. :-) (Though they are clearly beyond our president-elect. Sigh.) I think the theoretical idea behind the HSAs is that maybe the govt would put money into them for some people, potentially solving the savings problem. But that wouldn’t solve the problem of expenses skyrocketing and some paltry little HSA not being sufficient backstop against bankruptcy. (Did you know that 30% of cancer survivors go bankrupt from the experience, even WITH the ACA?) But yeah, I completely agree that we can’t keep changing the system every 4 or 8 years. It’s impossible to manage.

  7. Nothing is changing for us at the moment.

    I do agree that it’s easy to be concerned with the rhetoric that we’ve heard over the course of months leading up to this election. But, I also think this election helps once again to prove just how little so-called “experts” actually know (who were almost unanimously predicting an easy Clinton victory), and how far Trump will backpeddle now that he’s in office and (just like every other president and their promises) won’t be able to deliver on even a fraction of his “ideas” after inauguration.

    “Oh crap, now I actually have to follow through? Eh, nevermind”.

    Once again, we are taking a generally optimistic approach to all of this, just like we would if Hillary Clinton got elected. I do agree that the cost of healthcare is a huge determining factor in how easy it will be for us early retirees to continue living on our terms. I would be very, very surprised if anything major happens to the ACA. It won’t be repealed – not a chance. There are too many politicians worried about re-election for that to happen.

    Small, incremental changes might happen, but hopefully those changes turn positive rather than negative. But hey, only time will tell. We can’t do anything about that now other than continuing to live our lives the best way we can. Just keep doing our thing.

    See ya out there on the road!

    • It’s worth checking out Maggie’s comment, since she works on this stuff — while the ACA likely won’t be entirely repealed, it will likely be defunded severely enough to be meaningless, and the “affordable” piece will definitely go away.

      • I definitely agree with Maggie that defunding would be the technique that Trump would have to use in order to gut the meat behind the ACA, but I still don’t see that happening, at least to any large degree. I definitely understand the concern, though! If that does happen, it could seriously F-up early retirement!

        • I like your optimism, but don’t share it in this case. When Congress votes over 100 times to repeal Obamacare and then the candidate who gets elected runs on the platform of repeal, you can’t not gut the thing. I mean, I HOPE you’re right, but I’m not holding my breath. :-)

        • I completely see your point. I get the feeling, though, that Congress voted to repeal it as a symbolic gesture only – meaning, they knew it wouldn’t pass, but at least they get credit for “trying” something, hopefully using that to leverage support from their constituents.

          But…when such a vote could *ACTUALLY* succeed, I wouldn’t be surprised if they held back their calls for repeal.

          But of course, I could be completely wrong – only time will tell I guess. Hoping for the best!

  8. We are a big ol’ NA when it comes to this right now. But I do know a little bit about how unsettling it is to hear someone take office and in a single breath, talk about upending all of your plans. There’s been a war on teachers’ pensions (and to a lesser degree, a war on teachers) brewing in Illinois for a long time. Remarkably, though, even when it seemed like our pensions (and let’s be VERY clear here, that’s 10% of my annual salary since I started working) would take a huge hit, the state Supreme Court found the changes unconstitutional. That doesn’t mean they won’t come under fire again, though.

    Wait and see is part of it. Forming alternate arrangements is part of it. But I think and I hope making phone calls, writing letters, and voicing concerns is another huge part.

    • Unsettling is the perfect word. And thank goodness for your state supreme court sticking up for teachers! The war on teachers is not isolated to IL, as you know, and it’s deeply upsetting to me. You have the very most important job in the country, and we treat you like crap, make it impossible for you to know what your retirement might look like, etc. I hope you know how many people DO support what you do and know how valuable and irreplaceable you are. <3

  9. Great analysis. We are not close enough to retirement for the coming to administration to impact as dramatically as it could for you. I’m guessing you’ve already written on this, but would you ever consider a health share ministry? I know there are downsides but they aim for that evening out of cost on a smaller scale.

  10. Early retirees are known for their planning and, at least for me, I knew better than to solely rely on the ACA for healthcare and to take advantage of the subsidies and expect that to last forever. While Trump creates uncertainty, what was certain was that ACA was unsustainable. For one it capped older people’s insurance at 3x that of younger folks which many experts said want sustainable and it should revert back to the standard practice of 5x.

    I suspect the Republicans now in D.C. Will change a lot about our healthcare system but retain many of the things in ACA that worked. Maybe I’m just optimistic, but I think there are changes around the edges that can make the system work better. We’ll see, but that doesn’t change my early retirement plans which included building in plenty of cushion.

    Thanks for the great recap.

    • I think there are some seriously flawed assumptions in the current talking points about keeping coverage for pre-existing conditions while also bringing costs down. The math simply doesn’t work that way. So we’ll all just have to sit tight and wait this out.

      • I agree. And I don’t see anyway you don’t keep coverage for pre-existing conditions.

        There is no such thing as “bringing down costs” for our aggregated population. We are sicker and innovation is expensive. Folks without healthcare insurance paid or subsidized for by the government historically just showed up at the ER and don’t pay the bill so it’s picked up by the hospital and indirectly through the government with Medicare / Medicaid reimbursement.

        For early retirees, it’s unrealistic to expect a healthcare handout or free lunch. Health insurance and the underlying cost of healthcare driving it are expensive.

        Unfortunately the Affordable Care Act wasn’t affordable because it didn’t do anything to reform the way we access care or incentive preventative care and good diets. It just reformed how it’s paid for. People are still not taking care of themselves and just showing up at the ER.

        I made a wish list over on my site yesterday and invite you to take a look. Thanks again for the good post.

        • See my comment back to Elephant Eater — we discussed all these same issues, and the underlying problems that are driving up health care costs across the board. Until we fix the way we pay for health care and give people incentives to eat better and exercise more, this problem will only continue to get worse.

  11. Terrific summary. And congratulations on showing considerable restraint in this post. I can only guess you could have written much, much more and brought the hammer down on said President-elect.

    To your own situation, I think you are very smart to “hold FIRE”. With so much uncertainty on ACA and the fact that this is likely the biggest budget item for any early retiree, it is smart to wait until there is much more clarity. Ultimately, there needs to be a system that must not be changed back and forth depending on the administration. Our people deserve that. We can only hope. The Accidental Retirees described their reality above and this reality will apply to so many, retired or otherwise.

    We have the option to go onto my company healthcare plan at FIRE although costs will run about 60-70% higher than the plan we can find on the exchange, assuming our projected income numbers are accurate. The numbers still look do-able but we will have to watch some other budget line items more closely. What we don’t want to compromise on is our ability to travel and so continuing to build our already healthy mileage / hotel points stash is an ongoing priority. I can see even more the value of us having immediate family and friends in the UK and using their homes, hospitality as a base to explore Europe for example.

    • Haha, you know I would have loved to make this a very different post! But trying hard not to make this a political forum. :-) I agree with you that it’s deeply unfair to keep changing the system, so I will continue to hope that this administration and Congress can figure out some way to build a system that sticks. (Though my hope has limits, of course.) The ARs’ story breaks my heart, and that is exactly what we don’t want to replicate. But I also feel sick at the thought of having to work longer just because of health care, because every other developed country has figured this out already. Like you, we’re glad we have friends and family in other countries that we can still visit with our miles, even if our investments are tanking!

  12. My own plans don’t chance much since DH was intending to continue to work for at least 8 years, and we should all be able to switch to his healthcare. However, I will probably work a little longer (part-time, I hope) rather than pulling the plug completely next year as I had been beginning to think I could.

    As you mentioned briefly, the way the states handle the health care issue will have a big impact on individuals, so I would encourage everyone to get involved politically at the local level and advocate for the change you want! I live in Massachusetts, so we are covered by Romneycare and the ACA changes should have zero impact here.

    Instead of going abroad, you can move to Massachusetts! I’d love to have you all over for a potluck! [safety pin]

    • Oh, what a bummer that you’re considering working longer! :-( Though that’s not off the table for us either, especially if we could negotiate some deal to work in exchange for employer-provided health insurance. We’ll let you know if we end up needing to move to MA — just grow some bigger mountains, and we’re in. ;-)

      • In regards to work in exchange for access, maybe you could not work in exchange for access.

        If you’re confident that your company will be around for years and years, you might consider negotiating continued access to health insurance in lieu of some sort of year-end financial bonus or severance package. It probably varies from state to state, but in my state, the ACA plans are pretty crap if you have specific doctors that you want to see.

        When my Uncle retired, part of the contractual agreement was that he was going to have employer funded health insurance plan until Medicare Age. But he was also the vice president and 50% owner. So maybe that’s jut not possible for the vast majority of people, but it never hurts to ask. Especially if you’re willing to reimburse said company for the costs. HDHP/HSA plans are pretty cheap on a group plan.

        If they already know of your health particulars, they might be sympathetic. Particularly if you’re highly valued and have been a big reason for their financial success during your time there.

        Maybe I’m just too optimistic, but If your employer knows that you actually want to retire early and not just jump ship to take those skills to somebody else, they might be supportive of your endeavors.

        I’d say that for me, ACA plans are a last resort if they are still around. But a lot of the details are state-specific and it sounds like MA might be one of the more appealing states to end up in for health insurance, with or without ACA.

        • If I didn’t work for a megacorp, I’d absolutely pursue something like this, but I already know it’s not possible. Good suggestion for lots of folks, though! And as for you, hard to imagine CA doesn’t build a state system if the major ACA provisions go away…

        • California already has it’s own system, “Covered California” and even when I just go to a generic urgent care type place which tends to have less amazing doctors, I’ll see the sign on the window that they don’t accept it. If ACA Provisions go away, maybe it improves, but that’s not something I’m not all that optimistic about. Medi-Cal (California’s version of Medicaid) is absolutely horrible.

        • CC is just the exchange itself, not an actual plan, no? Like Washington Health Plan Finder or Nevada Health Link, or any of the other state exchanges. And you live in a Medicaid expansion state, so people well above the Medicaid eligibility limits still have their subsidies paid by Medicaid expansion. You point out a huge problem, though, which is just the enormous amount of misinformation and confusion out there, much of it politically motivated!

        • I don’t know how it all works. you can buy ACA compliant plans through a health insurance broker such as ehealthinsurance.com or you can use the California Exchange, Covered California. Haven’t a clue what the difference is between the two (if there even is a difference).

  13. Thanks for putting this together – while the issues don’t affect me directly right now or for the foreseeable future (employer health coverage – long ways from retirement) i know it’s putting a lot of people in limbo which is frustrating. The worst part is how long people won’t know the path forward – Nothing happens quickly in Gov unfortunately.

    Hope it shakes out better than people are anticipating, there was a lot of big talk and he has already cooled it down.

    • You’re welcome! Yeah, the limbo is definitely hard to deal with. I do think things will happen faster now with Rs in charge of everything, so maybe that’s a tiny positive of it all. But even with promises of immediate repeal and replacement, it’s going to take time to figure out the intricacies of a new regime on health care.

  14. Honestly before or after Trump I’m not sure I would recommend retiring at this time. With Brexit and the economy on what appears to be shaky footing there already was a large amount of uncertainty. We have yet to see the true impact of Brexit because its so far off and it is uncertain just how isolationist it will be.

    Economic theory predicts that the most damaging to the countries overall financial well being of Trumps plans is the isolationist stuff. Tarriffs, legal immigration restriction, and the abolishment of free trade are about the worst things you can do economically. That being said in general most of congress supports free trade, so I find that plan unlikely to occur. ACA meanwhile will get modified but how is a major question.

    In general I’m no more or less unsure what to expect due to Trump then I was to Obama when he ran on hope and change. Not much changed so perhaps I’m jaded but I wonder if the same will be true of Trump. I am much more nervous about the overall shape of the world economy. While I understand and respect the sentiment, I just feel congressional gridlock and the status quo is the more likely outcome.

    • I think you’re right about Congress and free trade, so I’m hoping that all the isolationism was just hot air. You can’t just cut America off from the world and expect that we’ll somehow get MORE jobs out of that equation, or that people will magically be better off. The interesting thing, worth a future post, is that privatizing Social Security would create a sustained influx into the markets that would both raise stock prices and create long-term stability because there will always be investment. I am not in any way rooting for that, but it’s an interesting flip-side to think about. And as for Congressional gridlock, I think we’ve seen the end of that — no one party has had this much power in decades, so I think we’re going to see a lot of fast-tracking of bills that do a lot of damage.

  15. As of right now, I don’t think I’ll have a huge problem. I already intended on getting an IUD before 2017 so I’ll be set there. I’m still in my accumulation phase (and will be for the next 8 ish years), so I’ve got time for all of this to settle out. Maybe I’m a bit glad I’m not retiring quite yet. What a shocking result.

    If anyone needs a picture of a cute kitten to lighten the mood, click this link: https://www.google.com/search?q=cute+kittens&source=lnms&tbm=isch&sa=X&ved=0ahUKEwj74OHOuqjQAhWC7SYKHSiqDGoQ_AUICCgB&biw=1920&bih=960

    • Aww, you’re the best, Gwen. :-) Thanks for the kitty. Let’s hope the death of the ACA doesn’t make employer-sponsored coverage worse, too (because a lot of what you currently have in your work plan is thanks to the ACA, too!).

  16. You might look into the health Sharing ministries that some of the nomadic PF bloggers use since in the past you had talked about awnting catastrophic only coverage. Liberty Healthshare does not have a specific religious requirement and your covered for up to $1,000,000 per incident. Now if you have brain cancer, you’re probably out of luck. There’s a pre-existing condition waiting period which may or may not be prohibitive for your finances:
    http://www.libertyhealthshare.org/faq#q2

    I can’t believe that there are people who just choose not to buy the insurance even though they can afford it. You’re young and healthy until the day that you’re not, right?

    • Thanks for sharing that suggestion with folks here, TJ! And totally with you — I have never been uninsured for one second, mainly because I’ve been lucky never to be unemployed, but I don’t think I could sleep at night if I was uninsured!

    • “I can’t believe that there are people who just choose not to buy the insurance even though they can afford it. You’re young and healthy until the day that you’re not, right?”

      I did that back when it was allowed. I went for about 2 years without any health insurance because I was young and healthy. I understood the profound risks, but I took those risks anyway. The funny thing is…I saved a BUNCH of money, but I have so very little to show for it because I also blew the majority of that money on crap I thought made me happy. :)

      • I know you well enough by now to know that you’re more of a “wing it” kind of guy and I’m more of a detailed planner. So while I can see how you wouldn’t have panicked in your younger years by being uninsured, I would have had an entirely different feeling about it all. Hahaha. ;-)

  17. Our early retiree friends saw their premiums rise with ACA because they were no longer able to get their catastrophic coverage–and they couldn’t keep their income below the subsidy limits. I’m hoping we will have more options for low cost coverage available.

    Though we intended to take advantage of subsidies, it is absurd that they are available to high net worth individuals. My long term plan has the full cost of insurance built in so I just saw my windfall disappear. Definitely a bummer!

    I think you are smart to cool your jets until more is known but I can’t imagine how hard that is! Thanks for the thoughtful post.

    • I agree on subsidies 100% — it always felt a bit icky to me, though we were willing to take them because that was the deal. If we can somehow get to a place where everyone’s price goes down, or the government just covers part of the cost for everyone, I’d consider that a win-win, because yeah, in a strict sense we don’t NEED a subsidy like a poor family does. But we also don’t feel safe retiring without some assurance that our costs won’t get out of control.

  18. We’re also in the wait and see camp as this is currently outside our circle of influence. It has started some interesting conversations, though, and led us to face our values and priorities head-on.
    For example, regardless of what happens, we believe family is more important than the political mess and we’re not moving anywhere else. We’ll do what we can to promote reasonable laws and policies, but we’re not giving up on our life here and our country for (hopefully) just a few years of chaos.

  19. Earlier this year, Mrs. SSC and I had been discussing what to do about health care, since it looked like the current 1.0 versions of the ACA wasn’t going to be sustainable or remain affordable. If the insurers keep dropping out in future years as they have this year, it would seem to end up as bad as private insurance, just with subsidies which may or may not stick around.

    I hope he gets a bureaucratic wake up call when he gets into office and finds out how little power he has to “make immediate sweeping changes.” He’s got enough to derail the train for sure, but all those lobbyists he’s talked about get paid a LOT by all the companies he’s wanting to mess with.

    Our plans haven’t necessarily changed in the grand scheme. Since Prof SSC started teaching, she realized she’s in a great school and a great position that probably won’t come up elsewhere. So, we’ve retooled our plans some to fit staying in Houston a little longer, especially if I’m not working. That could lead to OMY and push me back to 2019, so we’ll see how that pans out.

    At this stage though, a little more padding isn’t a bad thing, and until it starts to suck, we both really like our current lifestyle and work arrangements. I’d rather do less at mine if possible, but I’ve got something working in the background to buffer that, so maybe it will pan out to be something to transition to.

    In the meantime, it will just be a lot of hurry up and wait. I don’t see any sense in getting all kerfuffled about something(s) that may or may not happen and to what degree they will impact my life. Yeah apathy! hahahahaha :) Just kidding.

    • Can you guys get insurance through Prof SSC’s school? That would sure seem like a good backstop if you can get to a point where you stop working. We aren’t this far along in our conversations, but we’ve wondered aloud if we could keep consulting in some limited way for our employers essentially just in exchange for insurance. Our companies have both bent over backwards to give us great insurance, and we’re starting to wonder if we’d be morons to walk away from that.

      • Yes, that would be the plan is get insurance through her school. Hopefully in 2-3 years that’s all settled enough to know if I can say, later folks! My company’s plan is better than the school’s, currently, but if I quit and we went through her school, we’d essentially be working for healthcare and it would wreck other assumptions. So… Probably 2019 for me as far as FFLC goes just to create a buffer to protect against that. :) If she got another position somewhere outside of Houston, then yep, we’d for sure move and just use that insurance.

        • Gotcha. It makes me feel ill to think about you stretching out your timeline just for health care… (and I feel even sicker if I think about stretching out OUR timeline for health care!)… but glad to know you potentially have a non-ACA coverage option that will be much better than nothing!

        • Hahahaha, I was thinking, makes you feel ill? And then I got to the part about you doing the same. Sigh…

          Yes, IF she finds another job outside of Houston and keeps working, then we will have another healthcare option. IF we stay in Houston after I quit working, we’ll also have healthcare. We were jsut hoping at some point, we could both be not working, but we’re good with me being the house parent and dealing with that stuff.

          That said, it does suck ass that the options could suddenly be much more limited. Without the kids, I’d say, pack it in, we’re moving overseas! Maybe in a different life. :)

  20. Thankfully, most of that is not applicable to me at the moment since I’m going to be working for at least the next 8 years but it was a very interesting read and I can see the impact that this could have on many people. My brother has pre-existing conditions since birth but I’m not sure if he’s on ACA or employee sponsored.

    My biggest concern since I’m still building the nest egg is the economic situation. I work for a Silicon Valley based global company, so isolationism isn’t exactly ideal for me. Also, being a remote worker (cost of living in CA compared to GA is just WAY too high) I could be impacted during a recession. That’s just a big motivator to make life as cheap as possible and save as much as I can now.

    Hopefully things won’t get too drastic. We’ll just keep on keepin on.

    • Gosh, if ever there was a time when “working 8 more years” was a blessing, it’s now! I sure hope that by then we’ll all have some clue about what we’ll be doing long term on health care. And I can definitely see how, in your case, you’d be most concerned about trade policy! It sure seems like every economist knows that isolationism is bad, and at least a few members of Congress still seem to believe in economics… so let’s hope those folks temper things.

  21. Great write-up. I have too many thoughts on this to share them all, but here are a couple:

    To answer your question directly, we’re not changing our plans at all yet, though this could certainly result in our adjusting things down the road. We took this leap knowing that we could afford to buy unsubsidized insurance plans for both of us, if needed — but a lot of that is because we’re in our late twenties, and the premiums are still relatively low. Assuming healthcare and health insurance costs continue to grow well in excess of inflation, this would eventually become unsustainable for us. The immediate changes will be far more devastating for people in their fifties and early sixties, whose whole financial picture is dependent on the ACA subsidy model.

    Like you said, the vague proposals that have been floated to date simply don’t work, so I’m not planning around any potential new future state yet. The traditional insurance model requires discrimination based on perceived risk. Removing the pre-existing condition criterion completely changed the way insurers do business, and for that model to function, it requires a mandate to purchase insurance. Without the mandate, the whole thing falls apart: sick people buy insurance, healthy people do not, and the price skyrockets accordingly (driving a vicious cycle in which more healthy people choose not to buy). If the mandate is repealed but the pre-existing condition rules maintained, as has been suggested by the Republicans, I suspect it’s just a political maneuver to watch Obamacare completely fail and then say “hey, we gave it our best shot, but the whole ACA was doomed.”

    The notion of HSAs replacing health insurance is laughable, in my view. The whole point of buying insurance is to pool risk to protect against catastrophic events for which the expense is too great to save individually. This is fundamentally different from retirement savings, for example, where there isn’t a chance that I’ll unexpectedly have million-dollar monthly retirement expenses that need to be covered.

    If I had to make predictions, I’d say exchange plans are definitely safe for 2017. I expect that insurance plans for the middle class are likely to remain available in some form or another, but that federal Medicaid funding will be rolled back substantially, quickly. That could lead to even greater state-by-state variance in health insurance for people with low incomes. I could imagine a scenario in which states like Massachusetts and Oregon decide to maintain or expand their own plans while Medicaid is practically non-existent in the south.

    Flexibility is still at the core of our ER plans. Even if Trump and the Republicans had not won this cycle, the ACA was already showing issues (substantial cost increases, insurers pulling out of exchanges, not enough young people enrolling, financially unsustainable Medicaid enrollment growth) that would have required policy adjustments and could have affected our eligibility and/or finances.

    I also keep in mind that we’re just 2-4 years from yet another election, and our early retirements have many decades left. Perhaps this is like a dip in the stock market: government-funded healthcare may be rolled back for these next few years, but the clear long-term trend over the past 50 years (since LBJ first established Medicare and Medicaid in 1965) and the broad trend across the globe is toward more government involvement in health insurance and more movement toward socialized healthcare. The whole thing could fall apart irreparably, but I doubt it.

    In the meantime, we’ll keep an eye on what’s happening and work to maintain as much flexibility in our plans as possible.

    • I agree with all of this, and I’m sure we’re both in the same boat of just hoping they only do so much damage in two or four years. (Though I’m sure you’re, like me, not holding your breath.) Though I don’t want them to rush changes to the ACA, because it’s too big, complex and important, I also hope they’ll really focus on building something that works ASAP, instead of just setting the ACA up to fail. In part because I think this roller coaster ride is deeply unfair to people who don’t have the means to adapt as we all do, but also selfishly because I want to know what we’re planning around.

  22. They’re not going to fully repeal it. What they will do is defund it immediately. McConnell, Ryan, and Trump can do financial stuff alone without any congressional weigh-in. So, they’ll strip funding, but retain the law. Without funding, the exchanges, subsidies, and Medicaid expansion will crumble, but the law will remain (pre-existing conditions, what needs to be covered, 26-year old policy, no insurance caps, etc.). At that point, the “free market” will decide what happens. They will allow policies to sell across state lines (which many companies don’t want to do because they can’t maintain costs if they can’t have a network in which to make deals… if a Nebraska plan has to cover us Alaskans at 4x their prices, all plan costs will go up). It’s a given the insurers will pull out of the exchanges, so those are done. Then they will amend the law to get rid of birth control (another symbolic gesture). At least I have hope that that’s the worst that will happen. Also, I’m totally checking out New Zealand… :)

  23. Yowza… Big post (as promised) with a ton of interesting perspectives in the comments well! I am extremely interested to see how things will change from here. As Oprah said in her very unpopular statements – it seemed as though he was humbled. And then I watched 60 Minutes last night ans saw he is as pompous as ever just a bit more quiet in his approach. Regardless, what Trump does with this country that he will inherit is not only in his hands but all the politicians surrounding him. As someone above posted, we have many non presidential elections coming up that matter just as much to our country as this one. Healthcare is a huge platform that many are afraid to mess with for fear of non elections. I hope that for all my retiring or semi retired friends, the outcome is beneficial. Like many things in this FIRE movement – only time will tell. You can only prepare so much before the world (or your health) interjects.

    I think you are right to cool your jets for the time being. Let the dust settle around this election and see how the rest of the world reacts. Though I don’t believe the sky is falling, I do believe in taking your time when major events occur – weather it be in your own life or a global aspect such as this. Hmmm…but in the case of vampire immortality – all bets are off!

    • It’s definitely a time of a lot of anxiety for many! I don’t buy the humbled thing, though I still hope it happens. As Obama said, to root against Trump is to root against America. So obviously I hope he does a good job. Though I hope Congress doesn’t rush changes to the ACA because it’s a big, complicated issue with no simple solutions, I also sort of hope they address it right away so we’ll all know what the deal is sooner rather than later. Then at least we’ll have something we can plan around!

  24. So far I’m taking a “wait and see” approach. I expect most of what Trump promised during the campaign was puffery and grandstanding, and only some of it will come to pass in some form or another. He’s looking like “just another generic Republican president” so far, which is much better than crazy train Trump from the campaign trail. Some tax cuts, more national debts, perhaps a trillion+ dollar war or two. Yeah we might hit some soft spots and/or a full blown recession but we’ll muddle through.

    I’m expecting minimal tax cuts, if any, and possibly a slight tax increase from what they are proposing so far (sounds like it’ll hurt low to moderate income families with a few kids), but nothing to bust the budget.

    The biggest unknown for us is the ACA and what it’ll look like in a Trump world. Subsidies? Pre-existing condition coverage? Family premiums are already $16,000/yr for a basic silver plan. We can afford that for several years but long term we’ll have to go without insurance, move to a state with subsidies, or consider living abroad.

    Eventually something will happen to break the system more than it already is, and I bet we’ll get some actual cost-reducing policy and somewhat affordable healthcare. What that looks like, I can’t tell you. My hope is that having all 3 branches of government in the GOP’s hands is the perfect opportunity to fix our health care woes for good. Fingers crossed! :)

    • I hope you’re right that he just turns out to be a run-of-the-mill R, but then again he just appointed Steve Bannon chief WH strategist. Everything is so interconnected in the ACA, and while T is now saying he won’t get rid of everything, it’s hard to see how any of it works at all without the mandate, including the exchanges and the constructs of things like “silver plans” and “gold plans.” Sigh. So we’ll see. But I don’t blame you for considering moving to another state or abroad. Let’s hope it doesn’t come to that!

      • That Steve Bannon guy sounds like a pick for “Director of Propaganda”. :)

        Agreed on your ACA comments. I can’t see how it works without a mandate (adverse selection), and how a mandate works without some significant subsidies to make it affordable. But as we know, legislation doesn’t always work and it doesn’t always make sense. Ask anyone who lives in a non-medicaid extension state with income below 100% of FPL how the ACA helps them. :)

        • Yeah, exactly. And the law was passed with folks knowing it had things that needed to be fixed, but then the Rs roadblocked all attempts to actually fix that stuff. Sigh. Here’s hoping that the new Congress will stop obstructing and will actually focus on fixing the law in a way that helps more people!

    • Hey Justin – although I didn’t vote for Trump (or Clinton!), we are definitely on the same page with this one. Honestly, I don’t see a lot of significance happening out of Trump. I’m definitely not making any hard and fast decisions about our future based on the fact that Trump will be our next president, either. I am very much in the “wait and see” camp as well.

      Until then, we keep doing what we’ve been doing over the last several years.

      • Any thoughts on postponing early retirement until we know something more definitive? That would be a tough call for me if I was about to retire. Since I’m already not working, I’m planning on receiving subsidies through 2017 with good odds of continuing through 2018 (Paul Ryan’s proposed ACA “fix” gets rid of subsidies after 2 years apparently). And the replacement credits/subsidies could work out to our advantage, especially if it lets us buy a much cheaper policy and earn refundable credits (making health insurance a net money maker!). Optimist pipe dream perhaps but better than the alternative of fretting over a situation mostly out of our hands (for 3.95 years at least).

        • I assume this Q is meant for Steve, but it’s definitely something we’re thinking about. I think we’ll know a lot quickly about the coming changes to health care, because Paul Ryan et al have made it their central issue and they have no pesky Democrats in their way to make whatever sweeping changes they want. I care less about the final outcome than I do about just knowing what the heck it will be! But if we know by mid-year or so what the approximate set-up will be, then we can finalize our plan and potentially still pull the plug on time. Or not…

        • Sensible approach, and one that works pretty well with your timeline too. I think we’ll know soon in the new presidential term which way things are going, and it shouldn’t take long to pass whatever fix/ACA replacement they come up with assuming Trump and Congress get along.

        • Hey Justin – not for a second. While I do admit that things may turn out badly, this is another one of those “what ifs” that threaten to delay our plans for financial freedom. Basically, we will cross that bridge when we come to it. It’s entirely possible that nothing will happen. It’s also possible that something will happen, but it won’t be as bad as we fear. Or, the sky might literally fall! You never know.

          But in the meantime, I’m still retiring in December so I can start focusing on what truly makes me happy. :)

        • I admire you for making the leap in spite of the uncertainty! And you can always work more to pay for health care if you need to, since with subsidies going away, you’re less likely to be “punished” for having more income.

        • I can’t fault you for making the leap. It’s not like you can’t go back to work if you absolutely have to in order to secure health insurance. Call your break from work a sabbatical and you’ll be a-okay.

  25. I am so so thankful we have a solid health insurance option that the government hasn’t put on it’s short list of things to mess with. But I really feel for people who don’t. Not only does it impact early retires, but all the folks trying to start new business, take some time off, or become self employed. I do have friends who do the health sharing ministry options and really love it. It’s nice to have an option outside of a government program that will be constantly retooled, because honestly, it will take a long time before most Americans are happy with the way it works. I think it was the driving force in Trump getting elected (at least I hope.) So many people felt overly burdened by the rising cost of healthcare and wanted a solution.

    • I’m glad for you guys that you have a solid plan that isn’t on the chopping block! I laughed at your note about it taking a while to get to a place where most people are happy because… will everyone *ever* be happy?! ;-) I like your optimism about why Trump got elected, though. :-)

  26. As I’m already ER, I recently had to determine if we had a big enough buffer to deal with changes to the ACA.

    Would we have enough buffer to live without the tax credits? Yes, we did. Insurance prices could double from here (and they might) and we’d still be OK.

    Our backup plan is to just move overseas if things completely break. It’s starting to sound like a more reasonable option every day.

    • I hope it’s true that costs won’t more than double, though I think you’re smart to at least start thinking seriously about moving abroad. It’s not hard to imagine that becoming the most sustainable option, sadly. :-(

  27. As a political moderate about 10 years out from early retirement, I’m very cautiously optimistic. I work in healthcare and it’s so obvious that the current system is unsustainable. Either the patients suffer with less access for medical care (wait a year and a half in line for your open heart or joint replacement) or providers take a pay cut. I’m hoping for a third alternative where the insurance companies take some of the losses due to fair market competition.

    I’m not trying to be judgmental but it’s hard to be sympathetic to early retires who are bemoaning the possible changes when the cost of their rate benefits were huge burdens to the middle class (like a previous reader mentioned, millenials and gen x at the beginning of their careers with student loans, children and declining parents). Retirement is a privilege and it seems selfish to want to protect their system in spite of the burden it places in the rest of society, with respect to health care.

    • Since you work in health care, I’m curious what you think about potentially overhauling the ways that providers get paid for services. The elephant in the room that no one is willing to discuss (last time they got labeled “death panels”) is the question of using evidence-based medicine and stopping the fee-for-service system that incentivizes providers to order more tests, services and procedures. Those are the two big reasons why costs are rising so fast, and it’s verboten to talk about them (death panels! death panels!). I have no idea if Congressional Rs will open that subject, but if we’re truly going to fix rising costs, we have to talk about this! It’s not just a question of competition and the free market. And I agree to some extent about the burden of subsidies — we’ve always felt icky about them even though we planned to take them. But, that doesn’t mean it’s unreasonable for us to be able to plan for health care costs, along with everyone else. We should not have a society in which everyone has to work forever just because we can’t contain our health care costs because of a broken system of provider reimbursements, too many tests that don’t improve health, an unhealthy population who eats too much junk and exercises too little because we don’t invest in walkable cities, etc.

      • Yes reimbursements are a huge issue! But I see it negatively impact patients where issuance companies dermine what’s standard of care and medically medically necessary. Death panels were a tragedy. I think end of life care plans as well as power of attorney should be incorporated into open enrollment. I hate seeing someone go for multiple procedures that don’t improve their quality of life just because their family feels we should do whatever it can, even if it means their family member is trached and sedated on a ventilator for a month before they pass.

        Also a big thing coming is reimbursement based on quality assurance measures. While it sounds fair to the patient, it’s caused a huge problem. Addiction to opioids and heroin! Since the pain meds companies lobbyed congress and declared pain is the 5th vital sign, most patients are being over prescribed pain meds. Nursed are required to assess and treat pain every hour. Where as 30 years ago your doctor would say, yeah you had surgery a week ago, it’s going to still hurt a bit, now patients are being sent home with ridiculous amounts of pain meds and become physically dependent on them. If they can’t get them anymore they often turn to street drugs. So frustrating to see honest people trapped into situations like this!

        • The pain med prescription rates are truly a tragedy — it’s so upsetting to see. Thank goodness that epidemic is getting some attention, at least, so there’s a chance of addressing the problem. Unlike when I go to the doctor and they try to push a bunch of unnecessary tests because they bought the machine and want to be able to charge my insurance for it. There has got to be a better balance — we certainly don’t need the government between us and our doctors (unless it’s a woman’s body, apparently), but we shouldn’t all be footing the bill for frivolous/ineffective procedures either.

    • LX, I do see your point. I relied on my doctors since 2001 when my serious health problems started. 1 year after ACA started I noticed a decline in healthcare. In the past 4 1/2 years my primary doctor has been replaced 3 times! It is a revolving door in healthcare, unacceptable to me with my myriad of health issues. Premiums skyrocketed, deductibles are outrageous! I have had the same insurance for 25 years and ACA forced on us has caused a hardship. Not necessarily liking Trump, I will welcome the new changes and hope that he can undo some of the damages that Obama administration bestowed on us. Not to mention I hope he puts a stop to the iberals who are rioting and burning businesses. These so called protestors are inciting violence, blocking roadways, damaging vehicles instead of using that energy toward improving our neighborhoods. If they want to change things, try using that wasted energy to volunteer to help people instead of protesting (rioting). Let’s hope our new President can bring people together. The past 7 years has created unrest and divisiveness to our country. Too much uncertainty during Obama has turned people on each other. It’seems time to turn this country around! I grew up in a neighborhood that was Saul Alinsky’s first experiment (Obama’s mentor). It was an utter failure to have government “provide” for the people to keep them under control. Our society is more educated now. I’m glad we had our voices heard through the vote. Looking forward to the next 8 years of a better life.

  28. A terrific article and like that you stuck to the hard points, keep politics out of it and focus on the economic and retirement possible future.

    I genuinely don’t know how everyone does it in the US. I do not ever think about health care ever… seriously ever. I get everything I need, have never waited for service and never have feared for my financial security from keeping myself or family healthy. This must be a very hard topic to deal with as someone who wants to become FI , it is prevalent on every blog I read from USwebsites.

    I know you guys will figure it out as you have your life very well dialled in, are smart people and have the right attitude.

    Best Wishes in these uncertain next months.

  29. Wow that’s a good in depth analysis. I think Trump’s win definitely puts a lot of uncertainties in the FIRE community. I’m really glad I’m a Canadian and no need to worry about any changes in universal health coverage.

  30. I have the potential to get Irish citizenship and it’s something I’ve considered in the past. I used to want to work in the EU very badly but lately my fiancé and I want to stay in the states. Everything is still up in the air though until we get closer to retirement. Thank you for the background on ACA and how early retirees may be affected by the election. ACA was in our plan too but luckily (unluckily?) we have more time before we are retired to see how things shake out.

    • Haha! Just finally got around to starting to finalize my two kids’ applications to the foreign births register to become citizens of Ireland. My dad was born there, so they are eligible to become citizens. I may finally get around to getting my Irish passport as well.

    • Is there any downside of just getting the Irish citizenship? Would you have to live there for any amount of time? If there’s no requirement like that, I say do it. Worst case, you never use it, but it could give you more options should you ever need them.

      • As far as I know there is no downside to getting Irish citizenship. No, there is no residency requirement for myself or my kids (although my kids need to be registered on the Foreign births register) since it is citizenship by birth to an Irish citizen. I do believe, though, that we are not going to want to travel on Irish passports once obtained for reason of confusing the heck out of government agencies that keep track of such things. But my kids will have the opportunity to work and live in the EU, should they choose, when they get older. Heck, I could retire to Ireland. Getting Irish citizenship for my spouse would be more tricky. I think we’d have to live there for a while since there is a residency requirement for him.

  31. We’re still accumulating, and will be for four more years, so we don’t _need_ to react right now. However, our family is partially brown, so we have that to consider as well as everything you’ve listed above.

    At this point I am just grateful for two things:

    1. FIRE. Financial security (and we’re pretty damn close to FI) gives my family so many options. If things don’t go well (and I am still optimistic that they will), money gives us choices. If we choose to stay and fight the good fight, it is a choice – if we choose to just GTFO, that is a choice we have as well. Options are good.

    2. We have the option of going back to my home country. I hope it doesn’t come to this, but it is reassuring to know that we have this card to play.

    • It breaks my heart that “going back to your home country” is even on the table. :-( What a sad commentary on where we are as a country that you’d even consider that. But I get it. And you’re so right — having financial options is an incredible comfort at a time like this.

  32. Thank you for writing this. Selfishly, all I could think on election night was, “What will happen to FIREs???”

    I hope you continue checking in with how the new regime’s policies effect our community!

    • Hi Christine! I know, it was hard not to think selfishly on election night about how this could derail our plans! But of course we’ll be fine, and are the lucky ones no matter what happens. I’m truly worried about how poor and middle class people will fare, along with people of color, immigrants, LGBT people, etc. But we’ll for sure keep writing about this as it becomes more clear what policies we’ll be living with!

  33. Agreed. I have felt so much gratitude in the last week for my privilege, and compassion for those less privileged. That has been evident in my town as there have been many public showings of solidarity. Sometimes it takes a drastic situation to bring out those feelings, but I glad folks are reacting that way.

  34. Yes – you should all come and join me in New Zealand!!!! That would be great. Oh wait – we just had a massive earthquake here yesterday and there is flooding in parts of the country.
    I think every country has its challenges. We just need to keep going in our attempts to spread the message of tolerance and acceptance (and personal finance of course).

  35. Well, I admire the objectivity of the post and the holding back on making this a political post. Not easy.
    What we have seen recently in similar populist elections is that promises are high, but the implementation can’t really happen, at least not at the promised level. Yes he’ll do something to ACA, but how much is unknown.
    See what the Brexit team promised : they walked back from most of their promises the week after the referendum.
    Of course early retirement requires a whole lot more certainty on the next 4 years in order to work, but you can only focus on what you can control. No one knows what will happen and the US is still a great, developed and peaceful country.
    You having extra padding is probably the best way forward. And enjoying free activities in the nature is a great way to spend early retirement :)

    • Thanks, Nick! It’s hard to hold back, but I know the world does not need another rant right now. :-) I suspect you’re right that a lot of the campaign promises will turn into hot air, as they always do, but the fact that we’ll have no checks and balances for at least two years does make things interesting. You’re completely right that we’ll be fine, and we’ll still have a great life — we’re just eager to get a bit more certainty of what to plan around!

    • Safety pin love. :-) I think your nomadic life plan is sounding smarter and smarter. The Go Curry Cracker family has figured out how to make that work without having to worry about U.S. health insurance, so I know it can be done!

      • We have actually done this before – when becoming unemployed here we had to pay 1200 per month for insurance so we moved abroad and had my second child there. 1,800 TOTAL for all visits and delivery. Also almost no one has insurance there and therefore drs are really inexpensive comparatively and we stay healthy. Catastrophic insurance is something we would consider though.

        But for now, wait and see what happens next. I may consider moving away sooner even if not ready financially if things get cray cray, if not, stay put and carry forward.

        • That’s so smart! And wow, what a price difference. If it really comes down to it, I think we’d *have* to consider going abroad for health care reasons, since costs could wipe us out even with catastrophic coverage. Agree with you — for now, wait and see.

  36. I thought about how the ACA repeal would address you guys and am very glad you decided to address it on the blog.

    Right now we are still trying to process some of the more non-financial concerns for the transition. We are far enough from FI that it doesn’t change our immediate plans too much. Biggest thing is mortgage prepayments have stopped and we’re shifting money away from fixed income investments to equities (which have their own problems, but should be better against inflationary risk). Also more donations.

  37. My only politics are my 8th grade Vice President status and my father being Mayor quite awhile ago, everything else I turn a non-political eye, so take my thoughts with that.

    The ACA is certainly something leans towards the FIRE crowd, but this has only been around for less than 4 years what was done before? More caution with medical, higher premiums paid, more buffer. The uncertainty is the only thing that concerns me, I think the FIRE crowd is a smart bunch and will adapt to change in the best way possible.

    Taxes, inflation, recession, etc all of this changes over time. My response to this is very similar to any president be prepared to adapt.

    From your article I think the uncertainty is the biggest concern especially as it relates to your early 2017 goal, but I also wonder is this a little of the “one more year in disguise”? I’m not saying it is, but hey maybe you are looking to get to 1.5mm airline miles, you know because it’s never enough.

    • I think you’re totally right that it’s the UNCERTAINTY that’s the real issue. Obviously we can plan for anything if we just know what the heck that is! And I think, if anything, we have the opposite of OMY syndrome, in that we want to quit ASAP, but feel like we can’t quit without knowing what the new world order on health care will be. :-(

  38. I just discovered your blog when doing a search for writing about these issues, and I’m thoroughly impressed not just with this article but the entire site and look forward to making my way through all of your posts.

    I’m ER’d myself, much older than you two young-uns (I turn 60 this year, my wife is 53) and have followed the usual “leading lights” (MMMustache, ER Extreme, Bogleheads, Early Retirement forum, Retire Early Home Page, etc.) for years.

    Pre-Obamacare we lived in Mexico for three years, joining many thousands of other self-described “health care and insurance refugees” on the shores of Lake Chapala, the largest American and Canadian expat retirement area in the world.

    We didn’t want to be full-timers down there, but our ultra high-deductible plans ($10,000 each) were costing us enough that we had no money left over for actual health care. When ACA was implemented we moved back to the U.S., and depending on our taxable income have either been on Medicaid or on a highly-subsidized ACA plan (we normally do our best to keep our MAGI in the $12-15K range but as you well know all it takes is selling just a little too much stock and it’s easy to exceed the 130-138% of FPL (State-dependent) limit for Medicaid.

    I know that living abroad isn’t on the table for you two or for most others who read your blog, but it’s worth keeping in in mind as a Plan B or C. In Mexico with reasonable savings one can afford routine and even fairly serious care without going broke: pencil in $20-30 to see an English-speaking doctor, about the same for a dental cleaning, and at the high end o the spectrum 30-50K for something truly serious like bypass surgery or breast cancer treatment. We’ve kept tallies of actual costs incurred by many friends and these numbers are realistic for the kind of expensive (for Mexico) areas expats tend to congregate in. Private insurance is also an option but there’s underwriting and it isn’t cheap (think pre-ACA U.S. levels), but with a residency visa (easy to get with at least 75K in assets) one can also be on Mexican government health insurance (most gringos who do so use it only for catastrophic coverage and pay out of pocket otherwise). The same kind of thing can be done in Ecuador or Costa Rica, or better and cheaper still in Thailand but all of those places are much further away and have other challenges.

    We live in Arizona at the moment and while they’re a Medicaid expansion state they’re just barely so, with the legislature always looking to find ways to boot people out of the system and essentially no increase in doctor or clinic avaiabilty to meet the needs of the nearly 400,000 people who’ve joined Medicaid in AZ since ACA. Best advice for those who have the flexibility seems to be to choose a blue state that has plenty of poor folks (New Mexico comes to mind immediately – they have well-honed expertise in taking every government dollar they can get!).

    Like so many others we thought Clinton would prevail and some version of single-payer would be on the table, but instead we’ve taken a time machine back to 1950 (or Germany in the 30’s? Time will tell). Without a doubt anyone who’s thinking of retiring early who doesn’t have a couple of million or more saved would be well-advised to do what you two are doing and be cautious. We made a huge mistake retiring with far, far less than that and there simply weren’t any projections on the horizon for the kind of percentage increases in health care and insurance costs we’ve seen over the past 15 years and counting.

    If you haven’t read it, Darrow Kirkpatrick (caniretireyet.com), one of the best ER writers, covers the health care and insurance really well in his new book. As he points out, it is THE baffling issue to try and plan for. At a certain point, unless you’re filthy rich, it seem to me you have to set an upper limit number for what percentage of your monthly “draw” you’re willing to spend on health insurance and care both now and extrapolated into however long a future you project and be willing to become an expat when and if that number is exceeded. For our part, I suspect we’ll be moving back to Mexico for the duration – if they’ll still have us given Trump’s effect on their economy and threats to their future.

    • Hi Kevin — Thanks for reading, and for the wonderful compliment! :-) Made my day!

      Thanks for sharing your experience in detail — it’s so interesting and helpful. I would say moving abroad is not our Plan A for now (especially while our parents are still around), but we aren’t taking any options off the table. Health care is so important to us that I could definitely see us leaving the U.S. if the situation gets too bleak here on that front, but of course we hope it doesn’t come to that. It could also end up making a ton of sense to move to another state for the reasons you cited, especially those that have instituted their own universal health care systems, so that’s another possible course of action if it comes to it. We’d love to stay where we are, but we aren’t going to be dumb about it or let our savings get drawn down too quickly just because we’re too stubborn to see the writing on the wall. I love your idea of determining an upper limit to health care spending, and seriously considering expat life if the numbers exceed that.

  39. I heard somewhere that when Democrats win, people stock up on guns, and when Republicans win, people stock up on birth control. Count me in that group- the IUD goes in today. I find it appalling how gung-ho the Republicans are to rob millions of people of their healthcare, or the chance to make it somewhat affordable. The ACA is not perfect, but I went without healthcare for a year before it went into effect. I don’t want to have to do that again.

    • OMG — that’s funny and horrifying. Good luck with the IUD — it’s worse than they tell you, but totally worth it. :-) And here’s hoping that you are never uninsured again. Fingers crossed that whatever they figure out at least doesn’t force people back into the lurch.

  40. I’m late to this post but it is fabulous and incredibly well-reported. So many unknowns, so much instability. I agree with you on all. Not going to be happy if I need to go back to paying for birth control! Hard to understand how people can build their entire would view and governing philosophy on taking health insurance and medical care away from millions of people.

    • Thanks, Linda! And you know I won’t begin to speculate on our next president’s governing philosophy, or if he even has one. ;-) Fingers crossed that we at least get some certainty quickly around things like health care!

  41. I’m with you on worrying about recession. Isolationism has never actually been good for us as a country or as part of humanity. My business, is sadly/happily, doing better now because so many of my clients are afraid of the possibilities of the next administration. They are coming to me in record numbers. Sadly, most of them can’t pay for the help they actually need.

    I’m glad you wrote out all of the ways you think it can impact your money. I don’t know what I’ll do without the ACA. My business can’t afford to cover my insurance. I would like to stop working FT elsewhere. I’m young and healthy, but don’t want to endanger myself. But mainly, I worry about my friends with disabilities or chronic illnesses. Will Ryan dismantle medicare the way he’s been itching to? Will they die without insurance?

    • Ironically, our business might also be better in 2017 from the fear that Trump is stirring up. :-( Like you, we feel pretty adrift now without the certainty of the ACA. You’re smart to make sure you don’t go without coverage — let’s hope there’s still SOME way for people to get affordable health insurance under whatever new scheme they cook up. Like you, I’m most worried about those who can’t afford unsubsidized coverage or who have chronic conditions… but selfishly I still worry about our health, too!

  42. How fitting I found this blog post on inauguration day. And how sad that we still have no more idea what is going to happen then we did on the day this post was published. I’m pulling for you, but, honestly, I don’t think this is the time to be retiring. Perhaps next year when you have an idea what to expect?

    • So true! We’ll write a follow-up post as soon as anything becomes clear, but we’re not there yet. We just know that whatever comes next will be “great,” and “the best.” ;-)

      And re: our timing, though we don’t know anything now, we do expect to have a clearer sense of things by the end of the year. Even if new systems aren’t in place yet, we will at least know what they will look like.

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