How to factor in health insurance costs in plan for FIRE?

Investing / Others
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Inspired by the other post on How to factor in 1st and 2nd pillar in plan for FIRE ? and not finding anything specific (despite the topic being discussed occasionally in other threads), I have the following question: How do you simulate health insurance costs and plan to fund them if you consider keeping your base in Switzerland ?

To delve into concrete numbers, here below my use case:

  • Status: couple
  • Current age: 48
  • Health insurance plan: only mandatory insurance, max. deductible (2’500 currently)
  • Canton: TI
  • Current cost (2024): ca. 800 CHF/month (9’600 CHF/year)
  • Estimated yearly increase: 3.8% (personal situation, from backtest along the last 20 years)
  • Yearly cost at retirement age of 65 (2041): 9’600 * (1 + 0.038) ^ 17 = 18’000 CHF / year
  • Yearly cost at 80 (2056): 9’600 * (1 + 0.038) ^ 32 = ca. 32’000 CHF / year

Did you run a simulation based on your situation / what is your plan to tackle this ? :thinking:

3 Likes
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Is that two insurances?
That eastimate sound frightening tbh. I’m pretty sure it will flat out since I can’t see salaries rise that fast as well.

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Yes, that’s for the couple (ca. 2x 400)

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Accumulate a ton of money and be frugal :joy:

My RE withdrawal budget is 3% of NW and includes the cost of private insurance and maximum deductible every year.

Healthcare is one of the main reasons for choosing a low WR. In my case it would not make sense to retire too early and then have to compromise on health insurance as I would only worry. Others may think differently

3 Likes
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Maybe I’m being overly pessimistic, but in my cashflow, I have general inflation at 2.9% and then I add 3% inflation on top for health insurance costs. I guess even if the health insurance doesn’t go up, I’m sure, overall health costs will and that’s probably another thing I haven’t really budgeted for…

4 Likes
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Your simulation seems sensible IMO. I based my “simulation numbers” on similar “historical numbers”, namely KK infl 1997-2017 4% p.a., at general inflation 1997-2017 of 0.5% p.a.
I do use 2 to 3% general inflation going forward though , and so 5 to 8% expected KK inflation. So my numbers in 2041 for example are higher (21k, one person).

How to pay for it, well, hopefully dividends and capital gains at a hopefully SWR.