How You Behavior Could Rob You Of Your Social Security
Gil Weinreich had a dour but useful post about research that looks at how much of our soon to be reduced (in 2034) Social Security payouts will go covering healthcare expenses. He cited a reader comment where as a matter of circumstance the reader figured that 1/4 of their payouts (husband and wife) went to health care costs. Keep in mind that Social Security has not been reduced yet (maybe the government will get its act together on this and it will never be cut?) and too many of us will be relying solely on Social Security in retirement (it was not designed to do that but it is a realistic outcome given how undersaved we are). Gil also notes that health care costs have long increased at a rate faster than overall inflation.
We often look at the extent to which the biggest impediment to investment success is poor behavior; bad decisions stemming from an emotional response like panic selling after a large decline, panic buying after a large rally, allocating way too much to something very speculative and so on. On some level, just about every investor knows these are mistakes but the behaviors repeat over and over anyway. Who doesn't know that putting every nickel into Bitcoin is risky? But people did it anyway. People who did so at $5 are still rich but the same behavior at $20,000 was ruinous and there were countless media accounts of people who did that.
The simple act of buying a couple of index funds can get the job done provided you maintain a proper asset allocation, an adequate savings rate and avoid bad behaviors. I don't think this leads to the best possible outcome but it works and the outcome is far more dependent on things you can control than anything else. That we have a decent chance of determining our own outcome is very empowering and encouraging. Knowing what to do is simple, you already know. Actually doing it may not be easy of course but knowing what you should do makes it at least a little easier.
So it is with your health. Who doesn't know they should exercise? There are plenty of reasons/excuses why people don't do it but they know they should. Who doesn't know that too much sugar is bad them? They may not fully grasp the science (of course they don't need to) and perhaps the definition of sugar is broader than previously thought (carbs=sugar IMO so this means bread, pasta and rice are sugary) but we all learned early on that too much sugar is not healthy. I would encourage you to do your own research and draw your own conclusion but making time for exercise and learning about and implementing a better diet (I'll add intermittent fasting while we're at it), however you define those things and assuming you don't draw the wrong conclusion about what to do, will allow you to be healthier and more able bodied for longer (this is a concept known as healthspan). A key quote from Gil's post;
It means that a 65-year-old who has the health characteristics of a 45-year-old gets society’s financial support for maybe half a century, whereas a 65-year-old who is biologically 85 gets almost no benefits.
I tweeted that quote out and added that in many instances, whether you are biologically older or younger boils down to behavior (diet and exercise). I never assume absolutes in these things but for many of us it does boil down to behaviors. That we have a decent chance of determining our own outcome is very empowering and encouraging. Knowing what to do is simple, you already know. Actually doing it may not be easy of course but knowing what you should do makes it at least a little easier. Those last two sentences are pasted in from earlier on in the post, the sentiment is true for retirement planning, health matters and probably just about everything else.
Gil paints a picture of the US evolving to more of us spending our entire SS checks on health care. That is clearly and obviously problematic for society. Changing behaviors related to diet and exercise offers the chance to avoid having to spend your entire SS check on health care costs. I hope you'll take this post as a chance to solve or better yet, prevent your own problems.