Protecting Your Wealth Through the Power of Health

The connection between health and wealth is well-established, yet the extent to which health problems can derail our financial stability is often underestimated. While in this newsletter we talk about “Rich” as a relative term that’s not always associated with money, we often focus on wealth building as a matter of smart investing, sound budgeting, and career advancement, yet poor health can act as a powerful and insidious barrier to financial success. Health issues—whether they stem from chronic illness, sudden accidents, or mental health challenges—can disrupt income, drain savings, and thwart long-term financial plans in profound and lasting ways. As you will read below there are some shocking statistics.

My goal for this article is to give you the information and statistics to ensure that you are properly prepared and?protected and that your assets aren’t exposed to future health struggles. Statistics are noted throughout this article, but the most sobering statistics are at the very end of the article. If you want to know why I write articles such as these, read the bold font statistics in virtually every paragraph of this article.

The Direct Costs of Health Problems

The most obvious impact of health issues on wealth comes from the direct costs associated with treatment. Medical expenses are the leading cause of bankruptcy in the United States, with millions of individuals and families falling into debt every year due to unexpected medical bills. Based on 2022 statistics, healthcare spending was $4.5 trillion.

1. Medical Bills and Out-of-Pocket Costs:

Even for those with health insurance, out-of-pocket costs such as deductibles, co-pays, and uncovered services can quickly add up. The average American person with insurance coverage pays an average of $1,425.00 annually. This is especially true for chronic conditions that require ongoing treatment, specialist visits, or expensive medications.

2. Specialized Care and Equipment:

Conditions that require physical therapy, in-home care, or specialized equipment (e.g., mobility aids, and?oxygen tanks) can create additional financial burdens, ranging from $4,195.00/month on the low end to $6,673.00/month on the high end. These expenses are often recurring and can increase over time as health declines.

3. Alternative and Holistic Treatments:

Many people turn to complementary or alternative treatments when traditional medicine falls short. While these treatments can improve quality of life, they are rarely covered by insurance and can be costly.

Indirect Costs of Poor Health

Beyond the direct costs, health problems can take a heavy toll on wealth accumulation through indirect means, such as lost income and reduced earning potential. This is where the true long-term impact of health issues becomes evident.

1. Lost Wages Due to Time Off Work:

Health issues often result in missed workdays, reduced hours, or complete withdrawal from the workforce. For those in salaried or hourly positions, this directly translates to lower income. The situation is even more precarious for those without paid sick leave or short-term disability coverage, as every day off represents lost earnings.

2. Reduced Career Advancement Opportunities:

?Poor health can limit a person’s ability to take on new projects, pursue promotions, or invest in career development. Absenteeism, lower productivity, or an inability to meet the demands of high-stress positions can stall career progression, affecting long-term earnings and potential retirement benefits. From absenteeism, employees miss an estimated 1.5 billion days of work each year.

3. Disruption to Business Owners and Entrepreneurs:

If you’re a business owner, listen up, because for business owners, health issues can be even more detrimental. Employers lose an average of $575 billion in productivity each year due to poor health. A health crisis may force a business owner to reduce their involvement, delegate critical responsibilities, or even shut down operations temporarily. This can lead to revenue loss, reputational damage, and the potential for long-term business instability.

Even when people can continue working, health problems can change the way they make financial decisions. This shift in priorities can impede wealth accumulation in unexpected ways. Things like caring for aging parents are being revolutionized by a company called Calcium. The app is free, with a?biometric login, and allows you to track real-time stats of everything from what your aging parents ate that day to how they slept. I’ve found this solution incredibly helpful in my situation with a mother who suffers from MS. The work that Brad Evanovich and Terrence M. Ryan are doing far exceeds the app. The free value available on the Calcium Health app is more free tooling than I've seen on any other app. They are creating transparency between patients and Doctors and giving patients the power to have access to the same medical information as the physician. Now that is a major step in the right direction to help create order in the majorly dysfunctional medical industry. Remember those names, because you will be hearing a lot about both of them and their company Calcium in the future.

1. Early Withdrawals from Savings and Retirement Accounts:

Medical bills or the need to compensate for lost income often lead people to dip into savings, sell investments, or take early withdrawals from retirement accounts. The penalties and lost growth from these decisions can have a compounding effect on future wealth.

2. Debt Accumulation:

Faced with high medical bills, many people turn to credit cards or personal loans, accumulating debt at high interest rates. Over time, the burden of debt repayment can erode disposable income and limit the ability to save or invest. It is reported that 41% of Americans have some type of healthcare debt. 24% have past due or unpaid bills.

3. Selling Assets at a Loss:

In a pinch, people may be forced to liquidate assets like real estate, stocks, or business holdings to pay for medical care. Selling assets under duress often results in suboptimal timing and financial losses, further compounding the impact on long-term wealth.

The Vicious Cycle: Health Problems and Wealth Inequality

The relationship between health and wealth is often cyclical and mutually reinforced. ? of Americans say it’s difficult to afford healthcare costs. Poor health leads to financial strain, which in turn creates barriers to accessing quality healthcare, healthy living environments, and opportunities for recovery and growth. This cycle disproportionately affects those with lower incomes and fewer financial resources, widening the gap between the wealthy and the poor.

1. Lack of Access to Preventative Care:

People with fewer financial resources are less likely to receive regular preventative care, resulting in delayed diagnoses and more advanced disease progression. The higher the stage of illness, the more costly it becomes to treat, creating a downward spiral of mounting expenses and declining health.

2. Stress and Mental Health:

Financial stress is a known contributor to poor mental health, which can exacerbate existing health issues and lead to new ones. Depression, anxiety, and chronic stress can diminish a person’s capacity to work and engage in wealth-building activities, creating a vicious cycle that is difficult to escape. Mental health costs the US economy $280 billion annually, according to a Stanford study.

Addressing the health-wealth gap requires more than financial resources. It involves ensuring access to affordable healthcare, creating supportive work environments, and building systems that promote health and financial stability together. Prevention is something that is lacking in the US Healthcare outreach initiatives.

The Impact of Health Problems on Retirement Planning

One of the most damaging aspects of health issues is how they can undermine retirement plans. Healthcare costs are the 2nd leading cause of retirees running out of money. Many people accumulate wealth with the expectation that they will have a certain number of working years to grow their assets before transitioning into retirement. Health problems can disrupt this plan in several ways:

1. Early Retirement Due to Health Issues:

Chronic illness or disability may force people to retire earlier than planned, reducing their ability to contribute to retirement savings. This shortens the window for wealth accumulation and puts additional pressure on existing assets to last longer.

2. Increased Medical Costs in Retirement:

Retirees often experience a rise in healthcare costs as they age. Even with Medicare, out-of-pocket expenses for medications, treatments, and long-term care can deplete retirement savings rapidly.

3. The Need for Long-Term Care:

Long-term care (LTC) is one of the biggest expenses in retirement. 2022 statistics state that LTC-related costs average $75,000 annually, draining even well-funded retirement accounts. This is entirely preventable. LTC insurance does not cost a fortune. Additionally, some life insurance plans will allow LTC to be included at no additional cost. You can even find a zero-fee fixed indexed annuity that also comes with LTC coverage through individuals such as Scott Primm .

Strategies to Protect Wealth from Health Risks

Think you are immune? Consider that someone who turned 65 in 2021 has a 70% chance of needing LTC and 20% will need LTC for more than 5 years. Given the potential for health problems to derail financial plans, it’s essential to adopt proactive strategies that can mitigate the impact. Here are a few steps individuals can take to protect their wealth:

1. Invest in Comprehensive Health and Disability Insurance:

As mentioned above, having the right insurance coverage is critical. I get it, none of us like to be sold to, but we can ask friends who have worked with a reputable financial advisor to help them in a non-salesman-type way. Not all financial advisors are created equal. Some only care about themselves, some deceive to fatten their pockets, and there’s a troubling trend around financial advisors using their place in your religion to breach your trust. This is what happened to my mother and what led me to decide to become a licensed financial advisor myself.

Health insurance should cover major medical expenses, while disability insurance can replace lost income if illness or injury prevents you from working. Long-term care insurance can help manage costs later in life. Some modern plans, as mentioned, can combine all of them.

2. Build a Health Emergency Fund:

In addition to regular savings, consider setting aside funds specifically for health-related expenses. This fund can act as a buffer, preventing the need to tap into retirement accounts or accumulate debt. Consider that 37% of Americans can’t afford an emergency expense of more than $400 and 21% of us have no emergency savings at all. There is no shame in this. Start a different route of saving now! Put away a little bit from each paycheck and start small, avoiding comparisons.

I help people every day in this situation, and it brings me tremendous joy. My fellow financial advisors laugh at me that I’m not chasing the wealthy. I’m trying to minimize the gap between the wealthy and the not-so-wealthy. People who don’t know how they’re going to make their 50 thousand dollars a year salary pay the bills while their employer is pressuring them to do more. It’s always the same story … the business owners paying slave wages that have distanced themselves too much from the front lines.

We can all help each other, and?look out for each other, but we choose not to. We only help if you vote the same way we do, or if?your skin color is the same as mine. We look for the differences instead of the similarities. The wealthy could help a portion of the non-wealthy by putting money behind preventative messaging. Some people will listen and are desperate enough to either take advice or take their own life.

3. Focus on Preventative Health Measures:

If there’s one paragraph you take from this article, make it this one. Investing in your health—through regular check-ups, a healthy lifestyle, and stress management—can reduce the likelihood of major health problems. While this may not eliminate all risks, it can lower the probability of costly health events. Only 3% of healthcare spending is spent on preventative care.

4. Diversify Income Streams (for those who can't diversify investments)

Building multiple sources of income, such as passive investments, rental properties, or side businesses, can provide financial stability even if health issues limit your ability to work in your primary occupation. The more ways you can bring in money, the better. Think outside of the box. Sometimes a part-time job might be time best served working on a side business or sharing your talents and what you know on social media.

Prioritizing Health to Build and Preserve Wealth

Health is wealth in more ways than one. While financial strategies are essential, true wealth accumulation requires a holistic approach that prioritizes physical and mental well-being. By understanding the complex interplay between health and wealth, and by taking proactive steps to protect against health-related financial risks, we can create a more resilient financial foundation—one that stands strong even in the face of unexpected health challenges.

Protecting your wealth starts with protecting your health. Because, in the end, it’s not just about building wealth—it’s about having the health and peace of mind to enjoy it.

Final statistics of note:

1.????? The biggest expense of the US Government is healthcare.

2.????? Healthcare accounted for 17.3% of GDP in 2022. (Gross Domestic Product)

3.????? Total healthcare spending is $4.5 trillion or $13,493 for every person.

4.????? The?Federal Government spends 33% of its money on healthcare.

5.????? Households spend 28% of their money on healthcare.

6.????? Private Business spends 18% of their money on healthcare.

7.????? State and Local Governments spend 15% of their money on healthcare.

8.????? More than 50,000 people died by suicide in 2023.

9.????? More than 1.6 million attempted suicides in 2023.

10. Men, typically accounting for the household finances, were 3.85% more likely to die by suicide.

11. Someone commits suicide every 40 seconds.

12. 135 people die in the US every day from suicide.

13. Suicide is the 2nd leading cause of death for 14-year-olds.

14. The Top 5 professions that commit suicide the most are all healthcare related.

If you enjoyed this article, please share to get the word out and one-click subscribe if you haven't already. For more articles like this one, you can connect with me on LinkedIn, Medium, or any other platform of your choice.

My book goes into deeper levels of the last 14 statistics you've just read, including an in-depth look at the professions that commit suicide within healthcare and why those numbers are so high and troubling. The book can be found here. The profession that's #1 commits suicide at a rate of 8%, yet nothing is mentioned about mental health in the places they are trained.

?