2 Costs Never Going Down: Energy and Health Care

Although news media likes to amplify current events and prey on our fears, the recent events in North Africa/Middle East and Japan underscore a definite truth about Energy prices: While they may go down temporarily, through time they trend only one direction: UP.

Same with Health Care.

The Trifecta hitting Health Care (for US and most of Western Europe and Japan):

1) Ageing population

2) Less healthy population (read: poor lifestyle choices that lead to health issues)

3) Medicare costs and how they are paid (directly to physician from the program vs. indirectly in the form of premiums).

Which leads to this truth: Plan on increased costs for these 2 items in your budget. Not just for this month.  Or this Spring.  But plan it for the rest of your life.

No matter where you are in your life, these 2 costs will go up for you.

Even if they don’t go up in direct consumption for you, they will go up in the form of underlying premiums and indirect costs passed off through the end cost of other products and services you do consume.

In retirement? Count on Health Care costs being your largest line item.

How to address that?  There’s no magic solution beyond what you already know: Be aware of this and anticipate it by saving now for your future instead of crossing your fingers and hoping for the best.

(Disclosure: I am a Fee-Only Financial Planner. My website is here.)