[Editor's Note: This piece, originally entitled “Perspective changes when diagnosed with a chronic illness or cancer,” is written by “Bobby,” an anonymous physician with whom I have no financial relationship. I hope you enjoy it.]
I had it all planned out. With the help of what I had read on WCI, I knew when I would retire (late 50s, early 60s on a full government pension). I was going to delay Social Security until age 70 by living off my government pension and withdrawals from my HSA, Roth IRA, and TSP (government 401K) that I have fully funded for years.
Unfortunately, I was then diagnosed with Non-Hodgkin’s Lymphoma at the age of 38.
Initially I was given positive news in the way of treatments available and the high likelihood of success and a long life. I am now six months since diagnosis, and my treatments have caused complications and I am now facing a bone marrow transplant, which has a mortality rate of greater than 10%. I write this to review the possible ways in which I may change my financial plan going forward, and potentially as a reminder to folks that having your financial life in order prior to something bad happening is important.
Life Insurance
I already had a 30 year, million-dollar term-life policy that I had bought when it was just me and my wife. Now I have 2 children under the age of 3 and had not increased my life insurance. Oops. It is now too late to get a good term policy that is not crazy expensive. Thankfully, I work for the federal government and was able to recently sign up for FEGLI (Federal Employees Group Life Insurance) as they had a rare open season last Fall. I guess this is a reminder for all to make sure when you do have life changes to update your term life insurance as your needs change as it is too late for most when you are diagnosed with a major illness.
Health Savings Account
I have been saving every penny in my HSA for the past few years and investing in Vanguard funds (I use PayFlex through my federal Aetna policy). Now I am spending my out of pocket maximum via my health plan (which is $6,850), which I can still pay for out of current funds, but I wonder if I should just go ahead and use my HSA. If I don’t use it, it will go to my wife who can use it in retirement as well, so I will likely keep my plan as it is for now and keep saving. One of us can always use this money down the road. I am debating using it to free up current funds for trips or other experiences to undertake while I am still feeling fairly well. I don’t know that there is a right or wrong, just something to think about.
Buying a House
My wife and I had bought a 2 acre lot, came up with plans for our “Dream Home,” and were working with a contractor to come up with a contract for building a home when I was diagnosed. We halted plans to build for now. We already own a home that is sufficient for our family, but wanted to move to a town with better schools by the time our children are of school age (so we have at least a couple of years). The resulting mortgage would be almost $1500 more than what I am paying now, and we will have to see in the next 2 years how my treatment is going to help decide if we go forward with our plans. If I am not able to work, will we still be able to meet all of our needs with this new mortgage given our only income may be disability insurance benefits?
Disability Insurance
As a government employee, I have accrued sick leave from the day I was hired. I thought it was a lot, but after many trips to the doctor and several admissions, that sick time is dwindling quickly. I am able to ask others to donate leave as well, so that will hopefully cover me if I run out of leave during my treatments.
I am also covered if I am no longer able to do my job permanently in what the feds call Disability Retirement. Hopefully I don’t get there any time soon.
Gold Level Scholarship Sponsor
This does leave a gap. What if I run out of leave and out of leave that others donate, but I’m not to the point of Disability Retirement and should be able to be back in a few months? Worst case scenario is that I use my emergency fund (That’s what it’s there for, right?). I had never really looked too closely at disability insurance, as initially I was in the military, and then I knew there was sick leave and some form of disability with the government job. So bottom line here is that make sure you know what kind of disability insurance you have and make sure it covers the scenarios that you can’t plan for. I know I have read some good posts on here about disability insurance.
Student Loans
I acknowledge that I have been bad in this regard. I am several years out from residency and still have just under 200K in federal loans (2.625% interest rate and will be lowered to 1.625% in 2 years thanks to a loan benefit from Sallie Mae after so many on time payments. I had my loans in deferment for several years during my military time and during an MBA program that I did as well. I also have 25K in private loans at a 3.75% interest rate. I had gone through a divorce and my previous spouse was a spendthrift and racked up quite the credit card bills.
Bottom line, at this point in time I was getting ready to tackle my student loan debt. Now I definitely want to whittle down that private loan as it has the higher rate and is quite manageable. I really don’t have much benefit to throw money at the federal loans at this point. First of all, the rate is super low and will lower by a point in 2 years. If I die, my remaining federal loans will be forgiven and will not have to be paid by my estate, saving a lot of money for my family in the long run. Of course, everyone’s situation is different. I got my loans at a time of low interest rates and PSLF was not around at that time otherwise I likely would have done that working for the government and all. My situation may be unique, but I am also glad I left my federal loans federal as they will be forgiven if I were to die (something to consider if you consolidate privately).
[Editor's Note: Most private student loans are also forgiven at death, but read the fine print. They may be assessed against your estate, which is essentially the equivalent of having your spouse co-sign for them.]
Social Security Plan
I was all for planning on having all the money I needed and planned on delaying taking SS until I reached the age of 70. Now I hope to reach the age of 62, and will likely start taking SS at the age of 62. The “break even age” is somewhere around the age of 78 – meaning that if I die before 78, then I would have gotten more out of SS by starting at 62 than if I had started drawing at 70. The opposite is true if I make it past 78. Now there are other things to consider including spousal considerations as well, but in my scenario, I believe taking my SS at age 62 will be best.
This isn’t a lot of new information, but a reminder to think about things and plan for the worst case scenarios while you are still healthy, as that can help you if your health takes a turn for the worse. Hopefully I will be able to give you all an update when this posts to WCI in several months and let you know how I am doing.
What do you think? How would your financial plan change if you were diagnosed with a potentially terminal illness? What if you knew the illness was terminal? Comment below!
My life goals have shifting to simply enjoying life. One never knows where the future might take them, and only what is in the present can be counted on. Rather than using that time to worry about tomorrow (which unfortunately might get preempted), we’re trying to get something out of each day that makes it great.
If I were dying in a year, I would certainly not “think about retirement”, but start using each remaining day to actually live.
I would be cautious in balancing a “live for today” view vs a “planning for the future” view. Certainly, both attitudes must be weighed.
As a Hospice Medical Director, I helped care for 5-6 HIV patients in the 1990’s, certified to have less than 6 month outlook. One spent all his assets on travel, gifts, etc. When the highly effective combinations became available, every one of these patients improved and signed out of Hospice. But the one had depleted all his assets.
Treatment options for non-Hodgkin’s lymphoma continue to improve. I pray that “Bobby” will have good response to the BMT and have a long, productive life ahead. In my oncology practice, I followed patients as long as 20-30 years who were treated for lymphoma recurrence with transplantation. So there is surely hope.
The other thing some people neglect in using up assets if they are ill is their duty/ responsibility for their family. I have a family member whose spouse is 18 years younger. When he asks me for financial guidance I have to remind him he’s going to be living on SS alone soon since his retirement accounts will run out at his current withdrawal rate, probably by the time he’s 85. “So what? I may be dead by then.” But is his wife really going to be okay with him alive or dead with that drop in income? He claims he hasn’t got the ability to get HER to spend less money than she does. The rest of us remind him we won’t be supporting her (or the two of them) when his extra money is gone.
Especially for those of us whose spouses depend on our money savvy and may be less involved in the family finances- involve them, make sure they don’t have info you’ve overlooked about why they WON’T be okay going back to work or moving out of the family home or cutting back on luxuries/ necessities within a few years after your death. With a true comprehension of that info maybe my relative’s wife would be willing to live a little less large now. (Or at least she’d curse him less dead or alive when they have to cut back.)
BTW I discussed getting them to annuitize a chunk of the savings on the wife’s life span with our family finance expert and we recognized it’s most likely if that money were spent, the couple and or widow would likely sell off the annuity for a lump sum within a few years with a big net loss so I gave that up.
I’m trying to decide if that is a terrible story or not. Reminds me of a song…
https://www.youtube.com/watch?v=Jne9t8sHpUc
“Living for today” or “Saving for tomorrow” is not an either or proposition.
The paradigm that has been set up is all wrong, you can do both.
It just requires that you invest in a way that produces real spendable income today and you continue to add those types of assets in your portfolio.
Equity follows income (unless you own bonds), so you will get a capital gains increase on the value of the assets overtime while you are able to enjoy the fruits of what the assets produce immediately.
Righto. And “living for today” doesn’t demand spending lots of money.
Many of my favorite activities cost nothing but time and motivation.
Equity doesn’t always follow income. See Berkshire Hathaway, Microsoft for many years etc. In fact, in many ways it is more tax-efficient to have your gains come as capital gains instead of income. Either way, if you’re spending part of the investment return, the investment doesn’t grow as quickly as it otherwise would.
A powerful reminder that we never know what the future holds. Thank goodness you have the opportunity to plan for ahead for alternative scenarios – not everyone gets that opportunity. I wish you the best and hope you enjoy a long, happy life. Thank you for sharing!
Best wishes. I hope this post finds you doing well s/p BMT.
I am so sorry to hear of your diagnosis. One of my best friends from residency did die from a bone marrow transplant brought on by Non-Hodgkins lymphoma. This was in the early 90s so I expect the survival odds are much improved now. He was an anesthesiologist who had to go out on disability because of a peripheral neuropathy from chemo. I think your post does bring up the importance of adequate levels of life and disability insurance. It also shows that as life situation changes a financial plan must be reassessed and changed. I think that I would wait and see how your treatment goes before committing to building a house. I have never built a new house but everyone that I know that has talks about how stressful it is. Good luck and please update us on your progress.
We’ll be keeping you in our prayers during these next few tough months. As a radiation oncologist I’ve helped get people through marrow transplant by ablating the marrow. Transplant medicine has made huge strides recently and so you’ve got a great chance to pull though and lay down some house plans for those 2 acres.
Seems like you are far more ahead of the financial game than most docs would be at your age, so congrats on that. As a physician who sees lots of cancer, I think about your senario frequently, so it’s good to know my “to do” list in that case would be similar to yours. Thanks for passing on that knowledge in this tough time.
Thank you for sharing your story. You are in my thoughts and prayers. You remind me how important it is to plan for our individual life’s sequence of returns within the broader context of the market’s. Could you comment more on your thoughts on your emergency fund? When my husband had his stroke, our emergency fund bought us the time he needed to heal. I get concerned with many of the readers who don’t believe in emergency funds and fly with a 100% stock allocation if a difficult life sequence of returns meets with a poor market sequence of returns. Best wishes for peace and healing to you and your family.
DrMom I agree with your thoughts on 100% stocks and ER funds. This post is another example.
Thanks for sharing this personal story. It’s definitely thought-provoking!
My wife and I were actually talking the other day on the topic of “what if one of us was diagnosed with 60 days to live – what would we change?” Surprisingly we did have solid answers that jumped out (no major “bucket list” items) but it did get us thinking. And thinking is good.
Thank you for sharing your story. I think this emphasizes the point of being financially responsible, while at the same time developing a life you want to live. I am very laser focused on becoming financially independent ASAP, but at the same time I try not to totally deprive myself. It helps to find out what makes you happy and spend time doing that. For me it is spending time with my family, exercising, woodworking. Fortunately these are mostly free, and for woodworking I will commission projects for friends for small profit to cover new tools I need. Usually there is a way to do both. Start spending time on things that make you happy, stop spending money on stuff that doesn’t. I wish you all the best
My thoughts and prayers go out to you. Thanks for the post.
Your in my families prayers tonight. This is yet another reminder to embrace the present. Thank you for sharing your story and reminding me to enjoy life now and not always look to the future.
Tom @ HIP
Best of luck moving forward. I was self diagnosed with Cancer in medical school. I luckily had a short recovery and was able to complete med school on time. 12 years out and I am a very successful and healthy physician. Diagnoses of cancer will definitely help you to prepare for end of life, and enjoy life. On the note of a 1 million dollar term life policy, I personally think that should be enough. It would not leave your wife and children wealthy, but it would definitely leave them with enough to pay off a very nice house and pay for college educations. They would of course be on their own to make something of their life and work to gain wealth, but this isn’t necessarily a bad thing. It may also require your wife to work some and earn a living, but she may also end up re-marrying one day if you were to die young. Many people plan/pay for huge term life policies, but in my opinion this is only necessary if you want your family to be set for life if you die. As Warren Buffet once said, “I want to give my kids enough to make something of themselves, but not so much that they make nothing of themselves.” 1 million should suffice for that.
Hoping that you do well and don’t have to cross these bridges.
Very unfortunate. Shows how the best laid plans need to be somewhat flexible
Thank you for the guest post and so sorry to hear that you are going through this. These are all great points. The fact that life can come at you with surprises in a hurry is more apparent to physicians then others. Still we are often caught off surprise when we or one of our loved ones are sick and at so young.
Your points are all very true. Thoughts of dream homes, spending HSAs, and figuring out insurances all hold various parts of our attention. You remind us to focus on the important stuff now while planning for a future where you may not be here. Thank you and you and your family will be in my thoughts tonight.
I’d like to take this time to plug bone marrow donation registration. If you’re not already registered, please consider signing up as a potential donor.
Full disclosure, I have no financial ties to bethematch.com but I registered with them over a decade ago. I was recently informed that I am a match for a child with a blood dyscrasia. I’ve completed all the required steps and am simply waiting to be called in to donate bone marrow or blood within the next 90 days or so.
Best of luck to “Bobby,” his family, and all the other BMT patients and their families.
That’s great, MochaDoc! My wife and I are both registered at Bethematch.com, and I put a plug in for it on my site: http://www.physicianonfire.com/sunday-best-3122017/#bethematch
If you’re between 18 and 44, you can register for free. They say the chances of you matching with someone are 1 in 540. I’m impressed and happy to hear you are a match for someone. That’s fantastic!
-PoF
Although I am not the major breadwinner in our family, I can relate. I was diagnosed with Stage IV Diffuse Large B-Cell NH Lymphoma one month after my 40th birthday. Those were dark days for our young family. There were MANY blessings along the way; a closer relationship with my Heavenly Father, a renewed strength in my marriage, a greater appreciation for time and how it is spent, the support of an amazing community, and a pretty glaring reason for becoming better stewards of our finances. But, I was overwhelmed with the idea that I could be dying. Through that time, there were two pieces of advice that really helped. The first came from a friend who acknowledged my fear and concerns, but then simply said, “Yes…you could be dying…but you’re not dying TODAY. In the meantime, you need to keep living.” Great point. The second was from my father, who said, “In medical school, I learned that LIFE ITSELF is a fatal disease.” The truth is, none of us know when we will succumb to it. You could be the picture of health, step off a curb and still be hit by the bus. The answer to your question of “How would your financial plan change if you were diagnosed with a potentially terminal illness (or)…if you knew the illness was terminal?” should really be that it wouldn’t change a bit – because we already are living with a terminal illness. We just don’t know when it will be the end…and neither do you.
We determine now what is important to us and to our family, and then do the best we can to live our life in a way that makes it happen. It sounds like you are doing just that, and I applaud you for it.
I will be lifting you, your family, and your treating physician(s) up in prayer.
Wow…great comment. That edified me, and I bet “Bobby” as well. Life is a terminal disease, but we get to choose how to spend our allotment of days, great or few. Sending all the best to Bobby – lean into faith, not fear.
Nightmare dude, sorry you are dealing with this!
The key thing I take away from this is: term life insurance.
I always tell my residents that when thinking about TLI you need to literally sit down with your spouse/partner/parents (I recommend a bottle of wine) and say “how much do you want if I die.”
I have $3M on myself b/c my wife would want to be FI.
We have $1.5M on her b/c I know I would want to return to work if I lost her.
Difficult but critical conversations.
It really does boil down to just that doesn’t it?
Thank you so much for sharing your story. It sounds like you had many things in good order. There is definitely a balance of enjoying life now and being financially responsible for later.
Been bad about my loans 125k @ 3.75% have been ‘set it and forget it’
Been focused on growing top line
Making much more in other investments so haven’t touched them
Consolidated some years ago and was told disqualified for PSLF – too bad
Can I transfer and get a better rate?
Plan to pay off in about 4 years but paying $4,500 in interest seems excessive
Thoughts?
Probably not going to be able to refinance into a fixed rate below 3.75%, but possibly a variable one. Why not split the difference and use half of your investing money to pay down debt and the other half to invest?
Thank you for having the courage to share your story, Bobby. We’ll pray for a successful outcome for you and your family.
As you highlight very well, it’s important to have your financial “ducks in a row” before facing a potential crisis situation. Equally as important is making the most of your days and enjoying life to the extent you can. As physicians, we are accustomed to “delayed gratification,” but you don’t want to delay indefinitely.
Best,
-PoF
Thanks for the helpful post. I hope you have an uneventful full recovery. I had two partners in the past two years who were diagnosed with lymphoma and are doing well post treatment, I hope after the BMT this is your experience as well!
Term life: $1 million 30 year was better than what I did a decade or so earlier- I only had 15 year (and 1/2 mill- but with inflation and my income similar in amount) term and luckily could still get a new term policy when we had a second pregnancy leaving us in need of coverage on me for another decade or so. But how do we guess we’re going to have children or not? And would anyone give a $5 mill policy even to a doctor when they first marry in med school or residency? (And could such a doc afford it?) Do we say “Darling I know you want children but given that I had 2 high BPs and got lortab for 3 months postop once you’ll have to raise them on 1/4 our current income if anything happens to me- still want to have 3 and not just 1?”
Finance folk who follow this- is there a term product where you can increase the coverage without another exam any time later on in life (and at the same low price)?
I don’t know of a product like that, but it would be attractive to a lot of people.
LIFEPace Term Life through the AMA. I can bump amount by 10% after years 3, 6, and 9.
Forgiveness of federal student loans upon death is a taxable event, so you must factor in taxes on $200,000 in your case, which can be quite a lot, depending upon your tax bracket. I believe any loan forgiveness is taxable. I have a friend who died and his spouse was surprised y this unfortunate taxation.
PSLF isn’t taxable. I never realized that forgiveness at death is though. Interesting.
Good summary here from The College Investor.
http://thecollegeinvestor.com/16568/taxes-and-student-loan-forgiveness/
Our thoughts and prayers and best wishes are with you. I hope you make a great and speedy recovery.
This is a tough post to read because it is a very tough situation. Now since I am already retired nothing would be changing, but as he indicated I might spend on experiences, give gifts, and other spending that I might not be around to do. I hope this situation turns out well so that these alternatives are not required. Good luck to the author.
Thank you Bobby for sharing your story. Vibrant elders like to say age is just a number, but unfortunately in difficult situations like this it proves to go both ways. Clearly even at a young age you did many things right, and while one can never truly prepare for something like this, it’s good that your past interventions have left at least a few options and avenues open to you. Wishing you success in your latest treatments and a complete and lasting recovery.