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This One Expense Is Breaking People’s Retirement

Money Guy Show

Wed Sep 17 2025

Ask Money Guy | September 16th, 2025

Summary

Money Guy Show: This One Expense Is Breaking People’s Retirement

Hosts: Brian Preston & Bo Hanson
Date: September 17, 2025

Episode Overview

This episode of the Money Guy Show centers on a single looming expense that threatens to derail many Americans’ retirements: health care costs. Brian and Bo share alarming statistics, actionable financial strategies, and personal anecdotes, giving listeners the insight and tools to avoid being blindsided in the future. The discussion also addresses related retirement planning questions, such as Social Security timing, 401k contributions, and considerations for accredited investors. Throughout, the hosts inject their trademark banter and real-life examples, making a dense topic engaging and relatable.

Key Discussion Points & Insights

The Retirement Expense Nobody Plans For: Health Care

Health Care as Top Retirement Worry
- 63% of Americans ages 60-70 cite health care costs as their prime concern in retirement, ahead of running out of money (58%) or inflation (53%).
  
  “This expense can be a huge part of how much you spend when you actually retire.” – Bo [00:25]
- Many worry too late, with 1 in 5 people never even considering health care in their retirement plan.
Average Health Care Costs in Retirement
- Fidelity projects the average 65-year-old retiring in 2025 will need over $172,000 for medical expenses (including drugs, Medicare premiums, copays, deductibles).
  
  “That’s a big mountain that we think we have to overcome.” – Bo [05:39]
Breakdown by Age: Planning Ahead
Brian shares actuarial numbers showing how much younger savers need to set aside monthly to reach that $173,000:
- 20-year-old: $33/month ($4-5k lump sum)
- 30-year-old: $76/month (about $11k)
- 40-year-old: $182/month (about $24k)
- 50-year-old: $499/month (about $52k)
“If you can just save somewhere between $30 to $500 … you can be prepared for these expenses. These don’t have to be things that slip up on you.” – Bo [05:39]

Practical Financial Tactics

HSA (Health Savings Account): The Triple Tax Advantage
- HSAs offer pre-tax contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses.
- Only 13% of Americans use HSAs to invest for future needs.
  
  “HSA Health Savings Account is literally a triple tax advantage savings vehicle.” – Bo [03:47]
Prevention Is Cheaper Than Cure
- Proactive health choices today generally lead to lower costs in retirement.
  
  “It is less expensive to prepare to be healthy than to wait and get sick.” – Bo [07:54]

Medicare Selection: Measure More Than Once!

The choice of Medicare plan at age 65 has ongoing cost implications.

“The type of insurance you select when you hit age 65 can have a huge impact on the costs that you incur as you move through retirement.” – Bo [07:54]
Navigating Medicare is highly personal—a labyrinth with few clear guides compared to health and wellness advice online.

General Wealth Building: Mindsets & Milestones

“Health is wealth” — Building both is key.

“You know what’s great about being a financial mutant and having all this wealth... is being healthy and being able to actually use this and create memories and live your best life.” – Brian [06:41]
Retirement planning is about anticipating “unknown unknowns” and not being blindsided by them.

“The better you can plan, the more comfort you can have when you reach that stage.” – Bo [10:38]

Notable Quotes & Moments

Personal Anecdotes
- Brian references taking health for granted until his late 30s, using the “better-before” metaphor:
  
  “Whereas I am the better before pitcher that has definitely created ... I realized, you know what, I’m not headed to be where I want to be from a health perspective.” – Brian [06:41]
On Procrastination & Planning:

“Don’t let this be an emotional decision. There is actually a lot of moving parts and it is once again back to the personal impact personal finance.” – Brian (re: Social Security timing) [38:19]

Retirement & Financial Q&A Highlights

(Q&A starts ~15:14)

Counting Reinvested Dividends Toward the 25% Savings Rate

Discussion: Reinvesting dividends/capital gains is not the same as saving new money from income; those are part of investment returns, not contributions.

“What I don’t get to do is I don’t get to say, oh, well, my portfolio did so well. I don’t need to do my part.” – Bo [15:52]
Tip: Employer matches can count toward the 25% savings goal if income meets certain guidelines. [18:13]

Mega Backdoor Roth IRA – How Does It Work?

The Mega Backdoor Roth is available only if the 401k plan allows it, after maxing pre-tax or Roth contributions. It allows large amounts (up to $70k in 2025) to be directed into after-tax then Roth buckets.

“That’s Godzilla scream big when you see $70,000. When you see a hundred dollars a week, I hear … barracuda.” – Brian [25:56]

Claiming Social Security Early vs. Later

Delaying Social Security increases benefits by 8% per year past full retirement age, offering longevity protection.
But, “it depends” — the best claiming strategy varies based on income, life expectancy, marital status, and portfolio withdrawal needs.

“Social Security is one of those things you want to make sure you make the decision well and you factor in all the other pieces of your financial life because it can have huge implications.” – Bo [36:11]

Employer Pulling 401k Match: What Now?

Investigate if it’s a company red flag or a plan change for employee benefit realignment.
If the match is gone, revisit the financial order of operations:
1. Eliminate high-interest debt
2. Build emergency fund
3. Fund Roth IRA/HSAs before adding to unmatched 401k [43:10]

Private Equity for Newly Accredited Investors

Accredited investors aren’t guaranteed superior options—these investments are illiquid, complex, lightly regulated, and not always necessary for wealth building.
Brian cautioned:

“Do you need it? … There were a lot of incentives for us to put the clients in this … probably they can get out of for seven to 10 years.” – Brian [45:45]

Step-Up In Basis for Inherited Assets

On death, most assets (real estate, stocks) get a “step-up” to market value, erasing capital gains for heirs.
Gifting during life does not provide this—basis carries over.

“If you die with appreciated assets … your beneficiaries will actually inherit the assets at the new market value of what it was at the date of death versus all of your unrealized basis.” – Brian [56:16]
“It’s much better for your heirs to inherit property than it is for you to gift property.” – Bo [59:44]

Engaging & Memorable Moments

“Apex Predator” Analogy — Mega Backdoor Roth explained as Godzilla vs. a barracuda to demystify the scale of different savings strategies [24:33].
Storytelling and Banter — Brian’s Starbucks stock “coffee dividend” experiment, and a long tangent about comedian Nate Bargatze and Southern accents; injects humor and relatability [22:26-33:31].
Regular Polls & Community Features — The team encourages audience engagement via live polls and surveys, emphasizing their desire to stay relevant and responsive to listener needs [12:09-14:47].

Timestamps for Key Segments

Main Topic: Health Care Cost in Retirement – [00:21] to [10:38]
HSAs and Tax-Advantaged Saving – [03:36] to [05:39]
How Much to Save by Age for Health Costs – [04:26] to [06:41]
Medicare Selection Advice – [07:54] to [10:38]
Q&A / Saving Dividends & 25% Rule – [15:14]
Mega Backdoor Roth Practicalities – [24:17]
Social Security Timing Analysis – [34:30]
Employer Removes 401k Match, What to Do? – [39:20]
Private Equity for Accredited Investors – [44:33]
Step-Up In Basis for Inheritance – [56:04]

Tone & Style

Brian and Bo combine clear, actionable financial strategy with a conversational tone packed with anecdotes, metaphors, and Southern humor. The episode delivers expert insights in everyday language, making complex ideas both memorable and approachable.

Final Thoughts

This episode powerfully highlights the real, often underestimated financial threat of health care costs in retirement—while stressing the benefits of planning early, leveraging HSAs, making smart Medicare/insurance choices, and maintaining good health. The Q&A dives into advanced strategies and timely retirement concerns, reinforcing the show’s mission: to replace financial anxiety with confident, informed wealth-building.

Listener Action Items:

Evaluate your own retirement plan for health care cost readiness.
Consider using HSA as a key pillar in retirement medical funding.
Be proactive: Small, regular contributions add up.
Don't overlook the tax and inheritance implications when gifting or passing on assets.
Engage with the Money Guy Show—submit questions, complete surveys, and stay tuned for upcoming topics shaped by listener feedback.

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Transcript

A (0:00)

Bundle and safe. With Expedia, you were made to follow your favorite band. And from the front row we were made to quietly save you more Expedia made to travel savings vary and subject to availability. Flight inclusive packages are at all protected.

B (0:21)

This one expense is breaking people's retirement.

A (0:25)

Brian, I am so excited to talk about this because I think so often people don't think about this. They don't plan for, they don't take it into consideration. And this expense can be a huge part of how much you spend when you actually retire.

B (0:38)

Oh, I think they think about it. It's just, they think about it at the wrong time. So that's what we're hopefully going to be able to put the train back on the tracks so you don't fall into this trap for your own retirement.

A (0:50)

So we found that 63% of Americans, this is according to E Health, 63% of Americans age 60 to 70 say that health care costs are their top concern in retirement. It's the number one thing that they're worried about that could potentially derail their retirement.

B (1:08)

Now this ranks higher than if you look at number two and three. It was running out of money was 58%, inflation was 53%. But I know a lot of you are probably looking left, right, and you go, guys, I'm not 60 to 70. We know you're not 60 to 7. We know what our demographics are for our audience. But this is still something I think you ought to pay attention to because think about this. The majority of bankruptcies in America is because of medical things that happen. So health care is not something just for retirees. We need to be thinking about this for all of us because this definitely falls into the financial order of operations and making sure you don't put your life in the ditch because you haven't prepared accordingly.

A (1:49)

And when we actually look at numbers, we can put some hard data to this. Fidelity does an annual study and they found that the average 65 year old retiring in 2025 can expect to spend over $172,000 on health care and medical expenses in retirement. So this is stuff like out of pocket drug costs, Medicare Part B and Part D co pays, coinsurance deductibles. All the things that get wrapped into health care fall into this number and it is substantial for most retirees.

B (2:24)

Yeah, and then I think if you, you roll that in, this is back to. I think people don't think about this until it's too late. Because if you look at the next stat, 1 in 5Americans say they have never considered health care needs in retirement. So remember what I was talking about? Yes. You're not in that 60 to 70 age group of who was interviewed for this survey, but you definitely probably fall into the category of just not giving this enough mental awareness.

A (15:52)

Okay, we gotta think through the math of this. The, the answer is no. But let me make sure I understand the question. I make over 10k in passive and paying taxes keeps me below the 25% savings rate. In my mind when we Think about dividends and capital gains or capital gain distributions. Those are two components of return. So when we invest, there's generally two different ways that we get a return on an investment. We either get income that flows in, that's dividend, or we get price appreciation. I bought a thing for $10, now it's worth $12. Like, those are the two ways that we get returns. So when I think about dividends and capital gains coming in, I'm thinking about that in terms of. In terms of a total return perspective. That is an ROI return on my investment. What I don't get to do is I don't get to say, oh, well, my portfolio did so well. I don't need to do my part. No, no, no. Until I reach financial independence, until I have defined what my number is, until I understand what's the goal that I'm trying to work towards, I still need to be saving 25% of my gross income. But what's fun is, and if you've not done this, we have a number of milestone episodes that you should go check out. What's fun is, is right now, you see those dividends and those interest. I think you said it was like $10,000 that just came in for you this past year on that. That's amazing. What gets really exciting is when the amount your portfolio makes in terms of dividends and capital appreciation is bigger than what you save. That's awesome. And then what about when the amount that you have in dividends and appreciation is more than what you spend? That's awesome. And then what happens when you reach that point that the dividends and capital gains and appreciation you see from your portfolio actually makes more money than you do? It actually is working harder than you. That's when the seesaw begins to tip towards financial independence. And so what you're looking at is awesome, but it is not permission yet to take your foot off the gas pedal.

B (18:13)

I was trying to give. I was trying to give the content team enough time to give me the little prompt to be able to See it both kind of shared. You know, I hate giving only bad news because we just basically said no, you don't get to count that because that's part of the rate of return. So I wanted to kind of give the offset of first the motivation. Why? Where did we come up with 25%? That's what we've already shown you. That illustration. I will give you one little asterisk that does offset this is that if your income, household income, is less than $200,000 for a married couple, hundred thousand dollars for a single individual, you can actually count your employer match in that number though, because that's where a lot of people will get overwhelmed by the 25%. Especially if you're in your 20s where it's very much an aspirational goal because you're just brand new to this whole wealth building journey. It's nice if your employer, especially if you have a really generous employer, we have employers out there who are doing, you know, somewhere between 7 to 10%. You can imagine if the goal is 25% and you have an employer doing 10%. This thing gets a lot easier at 15%. So go out there and take a take advantage of that match offset and then maybe you're somebody. Because when I first read this, I read the $10,000 as bigger than per year it could have been, which it's not. But I'm just saying. But it's important because we're giving you a benchmark of what you should be saving because you're at the beginning of your journey and sometimes those benchmarks are rules of thumbs or other things we can give you are great starting points because it makes something that's somewhat complex with lots of variables, something very approachable and easy. But there will come a point once your assets and that's why I love that Beau was talking about the milestone episodes we do. There will come a point to, to where your income coming in from the portfolio or the appreciation or the change in value is going to match either what your savings rate is or even what your income is. And you're quickly start realizing, hey, that savings rate means less to me because my assets are at some critical mass or boiling point that is obviously changed for me. So I need to know if I'm ahead of the curve, behind the curve or right where I need to be. And that's where we've tried to create resources with the know your number but also ultimately it ends to the abundance cycle is that if you have started being the field general or the CEO or Chief financial officer for a soon to be approaching seven figure. You know, enterprise get some help because you just don't know what you don't know. And we'd love to leave the porch lights on for you to keep, you know, you help fulfill that abundance cycle so that you don't have to try to figure this out the full first time and only time you're going to approach this. You'll have somebody who's done this hundreds of times.

A (25:56)

So, so for those of you that don't know when you contribute money to your 401k most often, we know that we have two different ways we can do that. We can do pre tax contributions or we can do Roth contributions. But there is a third type of contribution that is allowable if your plan has implement this, and that's called an after tax contribution. And the way that after tax contributions naturally work is you put money in, you don't get a tax deduction, those dollars then grow tax deferred. And then when you go to pull those money, that money out in retirement, you get your contributions back tax free. But you got to pay ordinary income tax on the earnings. That's the way that it normally works. And so Levi saying, hey, okay, walk me through this works how this works practically. Well, a lot of plans will work in such a way that say, hey, before you can even do after tax, you got to max out your salary deferral. You got to max out the 235 into your either pre tax or your Roth. And then you can start doing after tax. So it sounds like Levi's done that and now he wants $100 every single week to be going into his after tax bucket. Well, my first question for Levi would be, man, if you've already maxed out the 26 at this or the 235 at this point through the year, you've been saving like a certain dollar amount every paycheck, why drop down to only a hundred bucks? It's exactly what Brian said the Great thing about after tax contributions is you can go all the way up to the section 415 limit of $70,000. They are not capped at the 23,5. So one of the things that you can do if your plan allows is you can every week or every pay period put money into the after tax contribution. Well then if your plan allows it, you can either convert those after tax contributions to Roth or you can do an in service rollover where you take that after tax money that you put into the after tax portion of the 401k, convert it to Roth or roll it to Roth. And now you've turned those dollars into tax free dollars. And once they start growing on the Roth side of your ledger, not only are your contributions going to be able to be pulled out tax free, but also all the earnings that those contributions make are going to be able to be pulled out tax free. So it is an amazing thing to figure out. Okay, one, is it available to me? Does my plan allow it? Does my plan allow either the in service rollover or in service conversion? And am I at the place in the financial order of operations? Have I thought through this that I'm in step six and I've gone to step seven, thank you so much. Where it makes sense for me to do Mega backdoor, or might I be better served if I'm going to go into the after tax bucket and I want to start building up that third bucket you want to think through when I think about my next dollar, what's the very best next use of it? And if you're someone who happens to have the Mega backdoor available, might be something worth taking advantage of.

A (36:11)

But the answer to your question, you said, is it better? And the answer is, it depends. And a lot of people don't recognize that the decisions you make around Social Security can have huge implications in retirement. And we mean huge, like hundreds of thousands of dollars depending on your unique circumstance. We have had clients that have retired early, and we have recommended, hey, you need to start drawing at 62. And here's why. Even though you're going to take a reduction from your full retirement age benefit, but based on their account structure, based on their living needs, age 62 made the most sense. There have been other clients who said, hey, you really need to wait until age 67 because you're still earning income or whatever else. We don't want you to get penalized because of income that you're making. And then there have been others who said, hey, it makes sense for you to make all the way till 70 because it's. It's some of the best longevity protection you can have inside of your portfolio. But then it's not only an individual decision when it comes to Social Security. If you are someone who's married, then it gets even more nuanced because you might even say, okay, well, I'm going to start drawing early on my record at 62. But then when my spouse hits full retirement age, they're going to start drawing. And based on the disparity between our earnings, I'm actually going to get an increase to the spousal benefit. And so it can be incredibly nuanced. And so often we'll see people come in and we'll kind of work through this Social Security analysis with them, and we'll recognize, hey, the plan that you had or the plan that you. You're like, you're leaving some money on the table, like, you should really think through. And we've even had this before where somebody said, oh, you know, I'm gonna. I'm gonna start drawing at 62 because I paid in. I want to get my money out. I don't. I'm nervous about it. And we've actually walked into the analysis saying, hey, just so you know, this is how much it's costing you by making this decision. Let's actually make the decision to go undo this election. Let's see if we can go back in time and change this, because it was that significant of a change. So Social. Social Security is one of those things you want to make sure you make the decision well and you factor in all the other pieces of your financial life because it can have huge implications when it comes to your retirement.

A (40:55)

Now we have done this before where we've, we've had a plan come to us and working with the owners and we've analyzed, they had a match and plan a place in plan. They had a match on their plan in place because that's the way it was set up, you know, eight, 10, 12, 15 years ago. And what happened is when we analyzed, we said, you know what, hey, this match is actually costing a lot of money. It would be more effective for you to move away from this match over to some sort of safe harbor formula where we're going to do non electributions and profit like. So it could be that, it could be that, but perhaps not. And perhaps it is one of these red flags you ought to look at. And so what do you do? Well, first thing I think you should do is I think you should stop and go to moneyguy.com resources and download your copy of the financial order of operations. Because Reby already alluded to this employer match is step two. It's a free money step in the financial order of operations. But now if that ends up going away, I want you to re triage your situation. I want you to say, okay, do I have any high interest debt? Do I have high consumer loans? Do I have high auto loans? Do I have credit card debt? Should I now redeploy what I was doing to get my match to go extinguish that? No. Okay, great. Do I have a fully funded emergency fund? Do I have at least three to six months of my living expenses in liquid cash readily available for the unknown unknowns of life? Okay, I've got that check boom. Then I go to step five. Am I doing my Roth ira? If I'm married, is my spouse doing their Roth ira? Are we doing a spousal Roth ira And am I eligible for a health savings account? Am I putting money into an hsa? Okay, if I check that boom, Then I get back to step six, then I can say, okay. Even without a match, there are still compelling reasons to fund a 401k. There are great tax benefits. I either put the money in and get a tax deduction on the front end if it. If I'm justified in doing so. Or maybe I put money in the Roth. And even if I'm not getting a match, there's still some really exciting tax benefits that can happen from that happening and compounding through time. So I think in your situation, Cranny, what I would do is I'd go back, rework through the foo and figure out where those dollars will best be deployed.

B (45:45)

I feel like mom's spaghetti moment just kicked in here. Eminem's starting to play in the background. That's all right. We're ready for it. Here's the thing. Yes. When I was working for a very large fee only firm, we put clients. It wasn't just private equity. We did a lot of private placements. We would structure real estate deals, we'd structure hedge funds, we'd structure all kind of things where we would go market to our wealthy clients. Hey, this is where you should put your money in. And look. And a lot of these things, they can be very good. I mean, one of my neighbors works for a private equity firm and they seem like they have tremendous success for how they're managing money. And I'm assuming. So a lot of these things they do well, but it's all like everything else. Who are you going into business with? Because they're not all created equally. And is this. That's one thing. Is this private equity firm that you're thinking about investing in going to be cream of the crop or. Or are they just taking advantage of this is what rich people think they should be doing. And they put together this product that they're now marketing well to get you in. Or the other thing I always say is, do you need it? Because what I found when I was managing people's money at this other firm is that there were a lot of incentives for us to put the clients in this. Because realize when you put a client into a private placement, this product probably they can get out of for seven to 10 years. I mean, it is going to have. There is going to be. It is going to be something that will lock them down for close to 7 to 10 years likely. Can you imagine from a client retention perspective? That's brilliant. I mean, that's a feature if you putting your wealthy clients in this thing. The other thing is, is that once again, the whole accredited investor. What's accredited investor? Accredited investor means you have enough money that the government's saying, hey, you're rich enough that we're not going to put the basic protections that we require on the general public to make sure you're not getting ripped off. And other things. We're stripping a lot of those protections away because you're rich enough that you know, buyer beware because you're on your own. And that's why they're required to give you all these offering packages and other things. And they'll write down the date that you received it is because then they can go, you know, this is a rich person. They're not protected. We can take their money if we need it. I'm oversimplifying, but that literally is kind of what the breadth of this thing is. I feel like I'm still dancing.

B (56:16)

Oh, what's funny is that this actually came into my life yesterday. Had a. Because since it's a client slash mother in law. We met with my mother in law's attorney yesterday on the phone and we were talking about just some quirky things that my mother in law, sometimes she listens. So Ramona, if you're listening, big shout out to you, love you. But it's so funny to me is that I say this to my wife. I'm like everybody listens to me. But the people that I love sometimes is because it's just some quirky titling that has been done without my knowledge. And we're working on getting all that fixed up on the estate plan for my dear, dear mother in law who gave me the gift of my beautiful wife. But it is one of those things where you have to be very careful with how you title assets. Just don't start strapping loved ones onto accounts because you can very closely or very easily screw up this awesome benefit called step up in basis. And what this means is, is we have an estate system now look, there's issues and they're slowly because if you know, if you die with too much money, the government will tax you. But for the majority of Americans out there, you're not going to reach those estate exemption or limitations. So for most of you, the way the tax laws are written is that if you die with appreciated assets, it can be real estate, it can be your investment portfol. But if it's appreciated when you die, your beneficiaries will actually inherit the assets at the new market value of what it was at the date of death versus all of your unrealized basis. Your basis actually gets stepped up just like the name implies. As you can imagine, that is a huge benefit for most Americans. Think about you bought your house with real estate being as crazy it is right now. You think about like my, I think about my parents. They bought their house in the late 70s for $60,000 wild. Now they're, they're in south Atlanta, so it hasn't run up as much. But still if they sold this for or they pass away with $400,000 value, you don't pay the income taxes on the $340,000 of gains you get. What's called a step up in basis. Your grandmother, who's from. I'll use another Atlanta example, because we're both from Atlanta. You know, great grandma bought into Coca Cola, you know, back when Coca Cola was just, you know, trying to figure out how to get the cocaine out of the recipe. You know, I don't know if that was ever in the recipe, by the way. That was a joke. That was a bad joke. Bad joke. Maybe it was because I think they did have Coca in the recipe. But anyway, great grandma got into Coca Cola back when it was pennies. Pennies. So you could buy tons of shares of this thing. Well, now, you know, if she passes away with it, you don't pay income taxes on that appreciation. Now imagine how this gets if you screw this up. Whereas all of a sudden, Grandma's sick, and then, you know, at the last minute, y' all go in and say, you know what? She's got all these shares of Coca Cola. We don't want to pay income tax on that. So let's just. We'll just start changing. Gift it. We'll gift it, put it in your name. That is a disaster. But somehow people do this all the time. They go and they put loved ones names on accounts, or they just start gifting shares without understanding that you might be screwing up. One of the greatest financial benefits of passing away with highly appreciated assets.