Plan Your Kaiser Retirement | Pension & 401k Planning for California Healthcare Workers

Bereket Kelile: 00:00

JPMorgan published their 2026 guide to retirement report. And the stat that should concern every Kaiser employee has, actually nothing to do with the stock market. By way of quick intro, my name is Barakat Khalili. I'm a financial planner, and I specialize in helping Kaiser employees plan their retirement. Now, in this podcast episode, I wanted to pull out five key findings from that report, that I think are gonna matter most if you're someone who works in health care and you're approaching retirement.

Bereket Kelile: 00:44

Now the first key finding has to do with when people are planning to retire. Most people have a retirement date in their head, and for a lot of people, that's age 65. And the JPMorgan data though tells a slightly different story where the average worker expects to retire at 65 and the actual median retirement age is 62. So what that's saying there is that, there are factors that can come into play that will cause you to retire earlier than what you expect. And that could be things like a health issue, a job change, or maybe some kind of a family situation or emergency that's forcing an early retirement.

Bereket Kelile: 01:25

And, based on the averages, there's a three year gap there, which might not seem like a big deal. But if you think about it, that's a bigger gap than it sounds because that's three less years of saving and building up your nest egg. Three few year years of or three more years of drawing down. Three more years of expenses that you have to cover. If you take Social Security early, that's gonna be three years of a lower income if you take that reduced benefit.

Bereket Kelile: 01:54

The key here is that your if your plan works at age 65, it's also a good idea to stress test that plan to see, does it work at age 62 or or at some point earlier than your ideal target date. And based on that, what things could you do if that scenario were to come up? It's not that you're guaranteed to retire earlier, but the data just says that there's a good chance that it could happen earlier than you plan, and you just wanna be have that heads up and be aware of that. Alright. Now we come to the second finding.

Bereket Kelile: 02:26

Do you know your actual retirement savings number? Most people feel pretty good about their retirement savings because they're contributing money from each paycheck. But contributing and knowing, whether you're on track or being on track are two different things. And they're not the same thing. And most people have never, bothered to check which one they are.

Bereket Kelile: 02:47

Here's the question that nobody asks. It's not, am I saving, but what should I have saved by now? And the and so the study ran the numbers on that very question, and the answers might surprise you. So I wanna encourage you to take a look at this table, that you can see if you're watching the video. You'll, pick the age that's closest to you and the income level that's closest to your income.

Bereket Kelile: 03:10

And, go ahead and find the number where that row and that column intersects. And the study is basically telling you this is the number that you should have today in order to retire at age 65 with your lifestyle intact. So now you know the target. The only question left is where do you actually stand? So now we come to the third finding which has to do with the cost of health care.

Bereket Kelile: 03:33

You work in health care. You understand the system better than most. You know what the procedures cost. You know how the insurance works. And because of that, you probably feel a little more prepared for health care cost in retirement than the average person.

Bereket Kelile: 03:46

And that could be the most expensive retirement assumption that you make. The thing is, what your career doesn't prepare you for is what the care costs when you're the patient and you're paying for it yourself. You see Medicare doesn't work the way most people think, and sometimes the bill can be bigger than what almost anyone, is anticipating. The study has run the cost, the out of pocket cost for, medical care and when you're paying for it out of pocket. For just Medicare and a supplemental plan plan, you're looking at $627 a month on average.

Bereket Kelile: 04:22

Now that comes out to, over $77,500 for the year. And the study is modeling a 6% health care inflation rate, which means at age 95 in thirty years time, that $627 a month grows to over $1,700 a month in today's dollars. Now that's not a projection that was just pulled out of thin air. That's actually based on historical data of what health care has actually cost retirees over time. And then one other caveat to keep in mind is that for a lot of healthcare workers, might be in a plan where you have retirement medical care covered, and that's great.

Bereket Kelile: 05:01

This might be a situation, I mean, you think back to that previous finding that we talked about where people expect to retire at 65, but sometimes they retire at 62. If that situation applies to you, then you're looking at a potential out of pocket cost, at least to bridge you over until the Medicare kicks in. So this is another important planning point when you're thinking about retirement and looking at those different scenarios, making sure that you're factoring in what that potential cost could be. Okay. Now we come to finding number four, which is gonna look at the relationship between guaranteed income and your spending level in retirement.

Bereket Kelile: 05:40

Here's something that the study found that probably no one has ever told you, which is that you can, have two people who retire, with the exact same amount of money and live completely different retirement. And it's not because one is better at investing or is more disciplined, but because of one variable that has actually nothing to do with either of those things. The answer is guaranteed income. See the question is how much of your retirement wealth is coming in as a predictable monthly check versus a an amount that's sitting in an account that you have to withdraw from. The people who have more guaranteed income tend to spend more.

Bereket Kelile: 06:21

Not because they have more money, they have the same amount of money, but they spend more because they're not afraid to. As you see, the the study found that there was a 44% difference in spending, in annual spending between retirees at the same wealth level. So that means same net worth but different income structure. And the ones that have the higher guaranteed income are the ones that are living the better retirement because they feel more secure in their, cash flow. And cash flow is gonna be basically the heartbeat of your retirement plan.

Bereket Kelile: 06:54

From many of the conversations I've had with Kaiser employees, a lot of times the concern that comes up is this uncertainty about what does the retirement paycheck look like. You've been getting that paycheck every two weeks, but going forward, you know that you're, you know, you've got social Security, maybe a pension if you choose to go with that option. But what does cash flow look like? What is that income rhythm gonna look like? And for Kaiser employees, think this finding is directly relevant because, you have a pension benefit, you have Social Security in addition to the savings that you've accumulated over time.

Bereket Kelile: 07:30

And this is going to, factor into how you think about and coordinate your income sources. Okay, we made it to the last finding. So good job hanging in there. I know it's a little bit of a marathon. But the last finding has to do with when you claim Social Security changes everything.

Bereket Kelile: 07:45

Most people make the most permanent financial decision in their retirement without running the math. And the day you claim Social Security with a couple of exceptions is mostly locked in for life. And the difference between claiming at age 62 versus age 70 is not a small difference. Now here's where the tension lives. Most people claim early and they do it for one of two reasons.

Bereket Kelile: 08:09

One is either they need the money now to grow or they're afraid that Social Security is not gonna be there in the future. And the study addresses both of those concerns. The breakeven right now between claiming at 62 and claiming at age 70 is age 81, Which means if you live past age 81, you're better off financially, waiting to take that Social Security benefit rather than taking it early. It's winning out every year after that. And for a healthy couple today at age 65, there's a ninety percent chance that at least one of you is gonna make it to age 85.

Bereket Kelile: 08:45

So for Kaiser employees who are in good health, taking it early is not the safe choice. It's actually the most expensive one. Because the question is not when do you want the money, but when do you need the money? And when do you need it most? The underlying question behind all of this of course is when are you going to die?

Bereket Kelile: 09:03

And that's certainly a very difficult question to answer. Now, you can consult your medical history, your family medical history, and look at the longevity of your parents and grandparents and other folks in your family. You can talk to your financial advisor. You can talk to, your doctor, your palm reader, your astrologist. Whoever gives you the most peace of mind.

Bereket Kelile: 09:23

But of course, none of those folks are gonna know when are gonna be able to answer that question for you. And so if you wanna hedge your bets, my typical rule of thumb on this is wait as long as you can, but take it as soon as you need it financially in order to make your retirement plan feasible. Now, if you're a Kaiser employee in your fifties, maybe one of these findings hit a little closer to home than the others. And if that's the case, then I made a video specifically for you. And it's called the Kaiser Retirement Playbook for 2026.

Bereket Kelile: 09:56

I made this, especially for those Kaiser employees who are in their fifties and who are maybe, say, five to ten years out from retirement. And it walks you through exactly what you can do this year to either get on track or just make sure you're staying on track to hit your retirement goals, hit your target, deadline, and, make sure that you're prepared when the time comes to put in that ninety day notice. You'll see the link in the description below and maybe somewhere around here on the screen. Thanks for listening. Rehobo Financial Planning Incorporated is not affiliated, associated, authorized, endorsed by, or in any way officially connected with Kaiser Permanente or TPMG, the Permanente Medical Group.

Bereket Kelile: 11:38

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